Finance Minister hints at expanding tax baseFinance Minister Yubaraj Khatiwada said on Tuesday that the government is looking to expand the tax base to generate more revenue in the upcoming budget for the next fiscal year.
Finance Minister Yubaraj Khatiwada said on Tuesday that the government is looking to expand the tax base to generate more revenue in the upcoming budget for the next fiscal year.
Speaking at a pre-budget discussion organised by Management Association of Nepal here on Tuesday, the finance minister also hinted at imposing restrictions on the imports of luxury items from the next fiscal year.
“By implementing stern tax policy, the government will not let the imports of such goods flourish in the name of collecting more tax revenues,” Khatiwada said.
Khatiwada charged that the local bodies have not effectively taken responsibility to spend the development budget, resulting in low capital expenditure.
Most of the participants criticised the government for failing to check the expanding trade deficit which has become a major threat to the economy.
According to Nepal Rastra Bank’s macroeconomic report, the country’s trade deficit swelled 24.5 percent to Rs887.88 billion in the first eight months of the current fiscal year. While imports jumped 23.8 percent to Rs.949.11 billion, export earnings crawled 14.6 percent to Rs61.22 billion.
Dipendra Bahadur Chhetri, former vice-chairman of National Planning Commission, criticised government policies that have failed to promote domestic products and goods to substitute imports. “Although the government revised the rate of cash incentives on exported goods, there are no such programmes to reduce the import bills,” he said.
Economist Shankar Sharma underscored the need to enforcing checklists measures to ensure that enough preparation has been made before awarding the contract of national level projects.
He also stressed the need for implementing an effective distribution mechanism of a government scheme that largely benefits small farmers.
Analysts also urged the government to focus on simplifying the provision of bonded warehouse to facilitate the exporters, prioritising the production of the large value added products and facilitating the backward linkages in the exportable goods. They also requested the government to devise policies to encourage banks and financial institutions to mobilise more funds in production businesses.
Gyanendra Dhungana, president of Nepal Bankers’ Association, demanded that the upcoming budget should bring a special package for banks that want to go into merger or acquisition.
At the time when Nepal Rastra Bank is facilitating big mergers among the banks, the bankers have sought special packages like tax holiday to the financial institutions.
The government has long been considering reducing the number of commercial banks to half from the existing 28 commercial banks.
Four years ago, the central bank asked commercial banks to increase their paid up capital by four-fold to Rs8 billion in a bid to push them into merging. However, the central bank’s policy did not yield the desired result as most of the financial institutions instead adopted the policy to increase their capital via bonus shares and right shares rather than merging.