Govt revenue jumps by 81.5pc in first 4 monthsThe government’s revenue surged by 81.5 percent in the first four months of the current fiscal year, as rise in imports and consumption led to higher tax collection.
The government’s revenue surged by 81.5 percent in the first four months of the current fiscal year, as rise in imports and consumption led to higher tax collection.
The government raised Rs168 billion in the four-month period between mid-July and mid-November, as against Rs92.6 billion in the same period a year ago, shows the latest macroeconomic report of the Nepal Rastra Bank. The income generated so far is almost 30 percent of the annual revenue collection target of Rs565.9 billion set by the government.
“Overall revenue went up in the review period because of higher growth rate of major taxes, such as value added tax, income tax, customs duty, excise duty and others taxes,” says the report.
In the first four months of the last fiscal year, the government’s revenue had dropped by 19.4 percent, as India had imposed a trade blockade, disrupting supplies of almost everything from essential goods to raw materials and petroleum products.
In a country, where the government generates most of its income from taxes levied on imported goods, the supply disruption, which started in the fourth week of September 2015, dealt a huge blow to Nepal. However, since the normalisation of the situation in February-with the lifting of the trade embargo-consumption has been going up, leading to higher imports and higher tax collection.
In the first four months of this fiscal year, value added tax (VAT) made the biggest contribution to the government’s revenue. The government raised Rs50.9 billion from VAT, or 30.3 percent of the total revenue generated in the four-month period, shows the report. VAT collection jumped 74.2 percent in the four-month period.
Second biggest contributor to the government’s revenue in the four-month period was customs duty. Customs duty collection surged by 124.1 percent to Rs37.1 billion in the first four months of 2016-17.
Next in the league table was excise duty. Excise duty collection jumped 135.4 percent to Rs29.6 billion in the first four months of the current fiscal year.
Among others, income tax collection went up by 21.9 percent to Rs22.8 billion, non-tax revenue increased by 33.3 percent to Rs14.8 billion, and vehicle registration fee
surged by 191.5 percent to Rs5.9 billion.
Nepal’s tax revenue as proportion to the gross domestic product stood at 18.4 percent in the last fiscal year, which is one of the best in South Asia. However, the government has often been criticised for not being able to expand the tax net and controlling leakages.