Revenue collection exceeds target

The government exceeded its revenue collection target by Rs 3.40 billion -- or two per cent -- as it registered Rs 179.90 billion collection. In the budget for the fiscal year 2009-10, the government had targetted to collect Rs 176.5 billion revenue.
"However, revenue collection could cross Rs 180 billion as we still have to receive the revenue data from one branch of Rastriya Banijya Bank (RBB) and four branches of Nepal Bank Ltd (NBL)," said revenue secretary Krishnahari Baskota.
"The collection is 25.5 per cent higher than in 2008-09," he said adding that the collection is record in itself. The revenue collection in the fiscal year 2008-09 stood at Rs 143.47 billion.
Encouraged by the robust growth in the first quarter of the fiscal year, the government has -- in its mid-term budgetary evaluation -- revised the revenue collection target upwards to Rs 190 billion. But in the later months, the growth rate of revenue collection has not seen consistence increase making the revised target impossible.
Baskota accepted that the revised target could not be met due to various reasons. "However, the collection is encouraging," he added.
The Value Added Tax (VAT) has contributed the highest in the total collection. "VAT contributes 32 per cent at Rs 56.75 billion in the total collection," he said adding that the second largest contributor is customs as it contributed 19 per cent at Rs 35 billion.
The income tax comes as the third largest contributor as it contributes Rs 33.75 billion, followed by excise duty that contributes Rs 24.25 billion to the national coffer.
Despite successful revenue mobilisation, entrepreneurs blame the government for being revenue-centric. "The import-based revenue has taken a toll on our export competitiveness," the entrepreneurs said adding that the whopping trade imbalance has not only pulled the Balance of Payment (BoP) to deficit, but also hurt the domestic industries. "In last 25 years, the country has never seen BoP deficit," said economist Dr Chiranjivi Nepal. "But this time, the country has seen a whopping BoP deficit of around Rs 18 billion," he said adding that the government has concentrated on revenue mobilisation instead of strengthening the export competitiveness of the local industries. "In the long-run, the domestic industries will be closed and the country will be dependent on imports," Dr Nepal added.
Though Baskota hailed the efforts of the customs officials and various policies -- like plugging the leakages -- the finance ministry has adopted to increase revenue, he also accepted that the revenue is import-based.
Since past a few years, the revenue collection has seen a consistent growth due to an increasing consumption of consumer goods.

Target vrs Collection
2006-07 -- Rs 85.37 billion -- Rs 87.71 billion
2007-08 -- Rs 103.66 billion -- Rs 107.62 billion
2008-09 -- Rs 141.72 billion -- Rs 143.47 billion
2009-10 -- Rs 176.50 billion -- Rs 179.90 billion