Kathmandu, June 2
The private sector of the country has criticised the federal budget 2018-19 and termed it a ‘bureaucratic budget’ as it will not be able to address the key constraints of the economy.
Federation of Nepalese Chambers of Commerce and Industry (FNCCI) — the largest private sector umbrella body — has said that the budget has only partially addressed the problems of the agriculture and tourism sectors and largely ignored the industrial and manufacturing sectors.
“Though the budget is supposed to be a political document, we found the federal budget ‘bureaucratic’,” said Umesh Lal Shrestha, vice-president of FNCCI.
“The country needs to attract investment in every sector, as growth in all the sectors is static due to lack of fresh investment, but the federal budget has imposed additional taxes even on those sectors that had started performing relatively well in the recent years.”
Citing that the cost of production is already high in the country, Shrestha said that the rise in tax rate will also discourage investment in the economy.
The Confederation of Nepalese Industries (CNI) has said that the budget has favoured the cooperatives sector and adopted a policy to collect more taxes from the industrial and commercial sectors.
“Industries struggling to survive will be hit hard as the tax rate is high,” as per industrialists. Ultimately, industries will pass on the increased cost of production to the consumers, except in those sectors like hydropower that cannot top off the cost to consumers.
Shailendra Guragain, president of Independent Power Producers’ Association – Nepal (IPPAN), said that the budget has not addressed the challenges faced by the domestic power producers. “Most importantly, the government has deviated from the earlier policy of extending value added tax (VAT) rebate to developers for Rs five million per megawatt for generation projects.
As per Guragain, no substantial facility has been offered to domestic hydropower developers, while foreign investors have been provided a raft of facilities.
“The federal budget has raised the tax on telecommunication service providers and internet service providers in contradiction to the government’s policy of increasing access of internet to all,” one internet service provider (ISP) told The Himalayan Times on condition of anonymity.
Likewise, the capital gains tax (CGT) threshold, which was Rs five million some two decades back, has been brought down to Rs one million on real estate trading, which is not pragmatic as the value of real estate has increased by multiple times over this period of time, as per realty traders.
The private sector umbrella bodies are preparing to bring out a common view on the federal budget after a few days.
A version of this article appears in print on June 03, 2018 of The Himalayan Times.