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Wednesday, May 1, 2019

MoF under pressure to achieve revenue target

Kathmandu, May 1

With the current fiscal year drawing to an end, the Ministry of Finance (MoF) is under pressure to meet the revenue collection target for the year. Though the government had targeted 35 per cent growth in revenue collection for the ongoing fiscal, the growth rate has been limited to almost 21 per cent till mid-March, as per officials.

MoF officials said that the government was able to collect Rs 588 billion in revenue till mid-March, which was below the government’s revenue collection target of Rs 674 billion within the given time.

The collected revenue amount, however, is 21 per cent higher than that of corresponding period of last fiscal.

This shows that the government is likely to miss its total revenue collection target of Rs 917 billion (which was revised down from Rs 945 billion through the mid-term review) for this fiscal year.

The government had last missed the revenue collection target in 2010- 11. Following the introduction of incentive-based revenue administration by the then finance minister Baburam Bhattarai in 2009-10, the government’s collection had surpassed the revenue target in the subsequent years.

As per MoF officials, collection of value added tax (VAT) and income tax has not been encouraging so far, which has thereby affected the entire revenue collection. Income tax and VAT are the major revenue sources of the government.

In this backdrop, Minister for Finance Yubaraj Khatiwada recently directed government agencies to intensify market inspection and raise revenue collection.

Meanwhile, some MoF officials said that tepid revenue collection is also the result of government’s policies to tighten import. Through the last fiscal budget, the government had raised taxes on luxury goods, including high-end vehicles and liquor products, which according to government officials have reduced the demand for such goods in the country.

Moreover, a few days ago Minister Khatiwada had said that the government is not in a mood to achieve the set revenue collection target through rampant import. “Revenue will be raised and the target will be met by improving the entire tax administration, expanding the tax net and raising domestic productivity,” Khatiwada had said.

It is also to be noted that Ncell was supposed to deposit Rs 39 billion in taxes out of the company’s buyout deal in the government coffers, which would have helped the government to meet the set revenue target.

However, as the telecom firm is preparing to go for arbitration, this is expected to further hit revenue collection of the government.

from Business – The Himalayan Times http://bit.ly/2J5Bjk1

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