Thursday, March 28, 2013

Rising import pushes revenue mobilisation up

Increasing imports have pushed revenue mobilisation up, yet, the Finance Ministry is unsatisfied with the mobilisation of Value Added Tax (VAT) and excise duty as the Inland Revenue Department (IRD) has failed to meet its target.
"Though both VAT and excise duty have recorded satisfactory growth, the Inland Revenue Department should identify leakages, and analyse reasons for not being able to meet the target," said finance secretary Shanta Raj Subedi, directing the department to monitor revenue loopholes and fix them.
He, today at the revenue evaluation meeting at the ministry, also urged the department heads under the finance ministry to plan for bridging the gap between imports and exports, promoting exports and increasing revenue by taking the private sector into confidence.
"The increase in import of food grains and fruits, which could be substituted, has increased the pressure on rising trade deficit," according to joint secretary at the ministry Rajan Khanal, who analysed the current trend of revenue mobilisation and rising trade deficit. He also stressed on the promotion of agriculture production that could make the country self dependent on food grains and boosting exports of tea and coffee that would contribute to revenue.
VAT — that contributed 30 per cent to total revenue mobilisation in the first eight months of the current fiscal year — has been the largest contributor to revenue for the last couple of years. Instead of export-led revenue mobilisation, rising consumerism has fuelled import-led revenue mobilisation growth, which is not a healthy economic trend.
In Falgun (mid-February to mid-March), the government mobilised Rs 6.65 billion in VAT compared to Rs 5.84 billion in the same month a year back due to rising import-led consumerism. 
But increase in income tax — that contributes 21 per cent to total revenue — mobilisation is a good sign, he said, adding that income tax is followed by customs with 20 per cent, excise 13 per cent, and non-tax revenue 12 per cent in the total revenue mobilisation of Rs 23.37 billion in Falgun.
According to the Finance Ministry, it has been able to mobilise a total revenue of Rs 177.96 billion till the eighth month of the current fiscal year 2012-13. "In the same period in the last fiscal year, the government had mobilised a total of Rs 144.46 billion."
In the eight months of the current fiscal year, the government has been able to mobilise Rs 53.49 billion in VAT, Rs 36.72 billion in income tax, Rs 36.46 billion in customs, Rs 23.08 billion in excise, Rs 21.18 billion in non-tax, Rs 6.24 billion in registration fee and vehicle tax, and Rs 0.19 billion in education service tax, making it a total of Rs 177.96 billion, which is 23.19 per cent higher when compared to the same period of the last fiscal year, the ministry said.
However, the ministry has been able to mobilise Rs 23.37 billion – Rs 18.86 tax and Rs 4.51 non-tax – in a month in Falgun, which is 46.13 per cent higher than the revenue mobilsed in the same month that stood at Rs 15.99 billion in the same month in the last fiscal year.  
Sectorwise contribution
VAT — 30 per cent
Income tax— 21 per cent
Customs— 20 per cent
Excise— 13 per cent
Non-tax— 12 per cent
Registration fee — 2 per cent
Vehicle tax — 2 per cent
(Figures of eight months of current fiscal year. Source: Finance Ministry)

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