Nepal | April 23, 2019

EDITORIAL: Revenue exemption

The Himalayan Times

Reviewing areas of revenue exemption will certainly give the government a better picture of the impact the facility has made

The Ministry of Finance (MoF) has said it will review the areas of revenue exemption from the next fiscal. Revenue exemption is a government-provided facility intended to protect domestic industries, facilitate/expedite development works, attract investment and encourage formal trade. Under this facility, the government, through the Financial Act, waives customs duty, value added tax (VAT), excise and other taxes in various products. The objective is to support industrial production, create employment and expedite development projects, among others. Finance Minister Yubaraj Khatiwada has said his ministry will review revenue exemption facility and those that do not meet the set objective will not be able to enjoy the privileges extended through the facility next year onwards. This will be a good move.

Revenue exemption facility in itself is not wrong. But the problem arises when this facility is misused. The chances of misuse of revenue exemption facility are obviously higher when there is no system of reviewing. The Office of the Auditor’s General (OAG) – the external auditor of government’s accounts – says that the revenue exemption facility is in rising trend. As per OAG’s report for Fiscal Year 2015-16, the government provided revenue exemption worth Rs 51.31 billion that year. As the audit process for Fiscal Year 2016-17 is underway, according to an official at the OAG, the revenue exemption facility must have gone up in the last fiscal. In the three previous fiscal years (from 2013-14 to 2015-16), the government had extended revenue exemption worth Rs 138.59 billion, according to the OAG report. But the government is oblivious to the impact of the revenue exemption facility. Since there is no review mechanism, the government at the end of the fiscal year never knows how the facility benefited the industries or how it helped in development works or whether it resulted in employment generation or whether that helped in bringing in investors.

As the MoF has said it has already started homework to review the areas of revenue exemption, we expect to see some tangible results soon. The Revenue Advisory Committee – which comprises experts, government officials and private sector representatives – recommends the MoF for revenue exemptions and accordingly those areas are included in the budget. Officials say the facility as of now is provided largely based on assumptions, while at times lobby groups influence the leadership to take decisions as per their interest. The finance minister has to justify the revenue exemption facility in Parliament if parliamentarians raise questions. But hardly do our parliamentarians engage in rigorous discussions on budget and other related issues including revenue exemption. This is a good time to start afresh and set the trend of extensive discussions on budget related issues. Lawmakers need to be aware of the budgetary matters and should extensively participate in discussions to ensure that revenue exemption facility is not granted to those areas which are not likely to make any substantial impact. The OAG had earlier advised the government to study the impact of extending revenue exemption facility. The government must scrutinise the beneficiaries of revenue exemption so as to ensure the facility is not misused.


Fully immunised

Kathmandu district has been declared fully immunised after children aged between two and 13 received all necessary vaccines within a year. This announcement was made at a programme organised by National Immunisation Programme, which launched the vaccination drive. Mahendra Shrestha, chief of District Public Health Programme, said 10 municipalities, including the Kathmandu Metropolitan City, were declared fully immunised.

Shrestha said a research was conducted among 40,000 children in the district. It was found that all children between two to 13 were immunised. He said all the households were inspected to reaffirm that the children were immunised. Kirtipur was the first municipality to be declared a fully immunised municipality in Kathmandu district. Immunisation is one of the government’s high-priority programmes which helps reduce infant and child mortality and morbidity associated with diseases preventable through vaccines. Smallpox, diphtheria, whooping cough, measles, neonatal tetanus, hepatitis B, TB and polio are the common diseases that are preventable by vaccines.

 


A version of this article appears in print on April 11, 2018 of The Himalayan Times.


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