Province 5 government unveils tax breaks to revive economyDiscounts will be given on annual vehicle taxes, land registration fees and registration fees for small industries.
In order to help businesses knocked down by the virus get back on their feet, the Province 5 government has unveiled tax breaks in the budget statement for the coming fiscal year.
The provincial government has announced discounts on annual vehicle taxes, land registration fees and registration fees for small industries in a bid to breathe life into the economy that has lain in deep freeze for more than two and a half months due to the lockdown.
Chief Minister Shankar Pokharel said that the tax exemption scheme was intended to turn the challenge of the coronavirus and lockdown into an opportunity.
The provincial government has announced a 33 percent discount on annual vehicle taxes, its largest source of revenue, to minimise the loss suffered by transportation entrepreneurs who were immobilised by the lockdown.
The fine for late payment that needs to be paid by mid-July has been waived. No fee will be charged for transferring the ownership of a vehicle in the name of residents of the province.
The government has given a 60 percent discount on the tax paid by owners of rental buses, minibuses and microbuses. No vehicle tax will be levied on scooters with an engine capacity of up to 150 cc used by differently-abled persons.
The land registration fee has been waived. No tax will be charged for contract farming with the mutual agreement of two or more than two parties.
A tax exemption of 50 percent will be given for land purchased for the operation of hydropower projects or tea, coffee, flower, vegetable, livestock and herb farming.
A 75 percent tax waiver will be given for land purchased for establishing or expanding productive industries that provide direct employment to more than 300 persons.
Until there is no manpower management at the local level, a vehicle tax will be levied on three-wheelers like tempos and auto rickshaws. The tax money will be shared between the provincial and local governments. Earlier, no such tax was levied.
In order to make the economy dynamic and create a more investment-friendly environment in the province, the registration charge on micro, cottage and small-scale industries established in the coming fiscal year has been completely waived.
The registration fee has been waived for transport vehicles purchased for industrial purposes.
The tax boundary of entertainment has increased, and taxes on parks and gardens will be collected through the local units. A 5 percent entertainment tax has been levied on movies, theatres and video houses.
The Province 5 government has not increased any tax rate. Government spokesperson Baijnath Chaudhary said the coronavirus and the lockdown had affected everyone and the economy had slowed down, so the tax rates have not been increased.
"The next year is all about survival, so we have provided as much relief as we can," he said.
Baburam Bohara, president of the Rupandehi Industry Association, said the budget was silent on the tax to be paid by industrialists. "Only tax exemptions on land and industry registration do not build an economy," he said.
Nirmala Chhetri from the Nepali Congress said the budget was neutral on increasing the tax range and increasing the revenue of the province. "A lot could have been done to increase the range, not the tax rate. Many resources of the province have been lost," she said.
According to the provincial Financial Comptroller Office, only 60 percent of the revenue target has been achieved in the current fiscal year. It seems that revenue will be impacted with these exemptions in the next fiscal year.
Revenue collection will go down automatically because of the tax exemptions announced by the state government, said Janardan Poudel, spokesperson for the Ministry of Economic Affairs and Planning.
"Most of the tax revenue in the province comes from vehicle taxes. Revenue will be reduced automatically due to the 33 percent waiver on vehicle taxes and full discount on the fine for late payment," he said. The budget has been submitted to the Provincial Assembly and it will be passed after deliberations.