Nepal | April 24, 2019

Tarai turmoil dents revenue collection

Himalayan News Service
Figures for third month of FY 2015-16; Source: Revenue Division, MoF

Figures for third month of FY 2015-16; Source: Revenue Division, MoF

Kathmandu, October 30

The country has faced significant revenue loss in the first three months of this fiscal as protests in the Tarai region since over two months dampened economic activities across the country.

Revenue collection dropped by 10.22 per cent in the review period as compared to the corresponding period of the previous fiscal due to the unfavourable economic situation, according to the Revenue Division of the Ministry of Finance.

The government had aimed to achieve 12 per cent revenue growth as compared to previous fiscal’s target of Rs 422.90 billion. However, the government wound up missing the collection target in the first three months of this fiscal by a whopping 21 per cent. Against the target to collect Rs 95.78 billion in the review period, the collection stood at Rs 75.66 billion.

The government missed the collection target in almost all major revenue headings. Value added tax (VAT) — the major contributor to the country’s revenue — was largely affected as import and economic activities have been disrupted due to the protests. Collection of VAT came in 26.43 per cent less than the set target and stood at Rs 23.58 billion. The government had targeted to collect Rs 32.06 billion from VAT in the first three months. The collected amount is 16.41 per cent less than the collection under the heading during the corresponding period of the previous fiscal.

As the agitating Tarai-based political parties have blocked movement of vehicles from India to Nepal by launching protests at Nepal-India border points, collection of customs tariff also dropped heavily. Collection of customs tariff stood at Rs 13.63 billion, a dive of 26.7 per cent when compared to the collection of the previous fiscal. In the first three months of this fiscal, the government had expected to collect Rs 18.32 billion from customs tariff.

However, income tax — the second largest tax heading — has exceeded the target by 15.38 per cent at Rs 14.86 billion. The government had aimed to collect Rs 12.88 billion under income tax heading.

The target for excise collection has also been missed. Collection from excise stood at Rs 10.22 billion, whereas the target was to collect Rs 14.64 billion under this heading.

The government managed to collect Rs 65.70 billion as tax revenue, against the target of Rs 84.24 billion. Similarly, it collected Rs 9.97 billion under non-tax revenue heading, where the target was to collect Rs 11.53 billion in first three months.

While it might be too early to predict anything for sure, it is becoming increasingly clear that it will be extremely difficult for government to achieve its revenue collection target of Rs 475.01 billion this fiscal.

 


A version of this article appears in print on October 31, 2015 of The Himalayan Times.


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