Fiscal federalism progressing at a moderate pace, further reforms needed to strengthen outcomes

Nepal’s legal and institutional reforms under fiscal federalism and public financial management at the provincial and local levels have continued but at a moderate pace, says the World Bank’s Nepal Fiscal Federalism Update 2024.

A reduction of available financial resources in fiscal year 2023 for provincial and local governments, mainly due to a decrease in federal revenue, led to the first fiscal deficit at the subnational level since the outset of fiscal federalism in 2017, it says, adding that to enhance the outcomes of fiscal federalism and public financial management including improved revenue generation for all three tiers of government, the Fiscal Federalism Coordination Division at the Finance Ministry was designated to coordinate public financial management reform efforts and the preparation and implementation of a Fiscal Federalism Roadmap.

The report provides a comprehensive review of the progress of fiscal federalism in Nepal. The recommendations are well aligned with our national-level vision on smoothing the fiscal transfers to help subnational governments carry out their responsibilities effectively. "The report also informs and supports our ongoing efforts to clarify responsibilities among the three tiers of government and advance fiscal federalism,” said Chief Secretary Dr Baikuntha Aryal.

Building on the first edition of the Nepal Fiscal Federalism Update, the 2024 edition explores in-depth the key pillars of fiscal federalism in Nepal: Revenue Assignment and Administration; Expenditure Assignment and Administration; Inter-Governmental Fiscal Transfers; Borrowing and Capital Finance; and Fiscal Revenue from Natural Resources.

It recommends specific measures to upgrade the Inter-Governmental Fiscal Transfer system and establish a consolidated public financial management performance database that includes data from the subnational levels to enhance evidence-based decision making and transparency.

“The report highlights the need to upgrade institutional arrangements for the Intergovernmental Fiscal Transfers system to make the transfers more needs-based and timely, and to increase the fiscal autonomy of provincial and local governments, in order to improve fiscal federalism outcomes,” said  chairman of the National Natural Resources and Fiscal Commission Balananda Paudel, on the occasion.

The report also recommends strengthening provincial and local-level institutional arrangements for fiscal federalism and public financial management operations, including actions to improve budget credibility to improve delivery of services by subnational governments.

“Fiscal Federalism is a foundation for sustained service delivery by provincial and local governments," World Bank country director for Maldives, Nepal, and Sri Lanka Faris Hadad-Zervos said, adding that they need adequate financial resources and the ability to make spending decisions at the subnational level, in the spirit of federalism and the Constitution. "The World Bank is committed to supporting the Government of Nepal, in close collaboration with other development partners, to further solidify fiscal federalism in Nepal."

New government promises economic austerity, effective service delivery

The newly formed government led by Prime Minister Puspa Kamal Dahal 'Prachanda' has promised economic austerity and effective service delivery.

The first cabinet meeting of Prime Minister Dahal decided not to take the increased salary for the current fiscal year. The budget for the current fiscal year 2022-23 has increased the salary of the government officials, including the ministers. Due to economic crisis, the erstwhile government failed to mobilise the revenue not only falling short of the target but also failing to meet the recurrent expenditure.

Dahal, in the cabinet, also instructed to prioritise good governance, better service delivery and end the hassles faced by people while obtaining passports and licenses. The eight-member cabinet also decided to make arrangements to ensure that citizens can obtain essential documents like passports and driving licences without waiting long in queue. Passport and driving licence-obtaining processes in Nepal are complicated and mismanaged, which has forced service seekers to stand in queue for hours from early morning. Likewise, there is a lot of complaints of bribery and forgery.

The new government has decided to make efforts to reform the service delivery of government offices to make the public feel change.

Talking to journalists after the first cabinet meeting today evening, Dahal said the cabinet has been formed as per the people's mandate. "Challenges galore ahead," he said, adding that the first meeting of his cabinet decided to take stock of the economic crisis and identify solutions.

Earlier in the afternoon, Dahal also instructed not to buy extravagant goods at Baluwatar, the official residence of the Prime Minister, where he will be shifting day after.

According to Prime Minister Dahal's personal secretary Ramesh Malla, the Prime Minister has instructed not to buy any luxury goods for his use. Dahal courted controversy, during his first tenure as Prime Minister, as he was blamed for buying a bed worth Rs 1 million for him.

Dahal was sworn-in as the 44th Prime Minister of Nepal at the President Office at Sheetal Niwas today and formed an eight-member cabinet immediately.

Shah becomes highest tax payer

Vijaya Kumar Shah, chairman of the Jawalakhel Group of Industries became the largest taxpaying Nepali in the last fiscal year. 

Shah, who leads Jawalakhel Group of Industries that incorporates companies like Jawalakhel Distillery, Himalayan Distillery, Raj Brewery, Asian Distillery and Vijay Distillery, received recognition as the largest tax paying person a fiscal year ago on the occasion of the 9th National Tax Day, also.

Finance Secretary Krishna Hari Pushkar honoured Shah along with Surya Nepal Pvt Ltd – as the largest institutional taxpayer today at a programme organised by the Inland Revenue Department (IRD) to mark the 11th National Tax Day 2022.

During the last fiscal year 2021-22, Surya Nepal paid Rs 10.72 billion in taxes, up from Rs 9.34 billion a fiscal year ago. The company sells cigarettes, matchboxes, incense sticks and confectionery.

The government honours largest taxpaying individuals and organisations under 15 categories of taxes on the occasion of the National Tax Day every year.

The government also honoured Nepal Telecom under the largest income taxpayer category, whereas the producer of refined oil and vegetable ghee Shiva Shakti Ghee and Rajesh Metal Crafts were honoured under export-based and special industry categories. The OBC Feeds and Food was honoured under the agriculture and livestock industry category. 

Likewise, Chhimek Laghubitta Bittiya Sanstha received honour under cooperative category, Nabil Bank under banking sector and IME Remittance under remittance category are also honoured for their largest tax contribution in their respective sectors in the last fiscal year.

The Inland Revenue Department (IRD) Nepal has honoured Nabil Bank chief executive officer (CEO) Gyanendra Prasad Dhungana for the bank’s contribution. Nabil Bank had paid Rs 2.79 billion in taxes in the last fiscal year. This is the seventh consecutive year – in the past 10 years – that Nabil Bank has been honoured for its contribution to the national exchequer. “The Bank has paid Rs 18.38 billion in taxes to the state in the last 10 years. “The bank has also distributed Rs 14.45 billion in cash dividends and bonus shares worth Rs 18.8 billion to its investors,” according to the bank.

According to a press note issued by the Inland Revenue Department, the programme to commemorate the 11th National Tax Day also witnessed Nepal Re-insurance Company being honoured as the top taxpayer in the insurance category. Biratnagar-based Nobel Medical College and Teaching Hospital was felicitated as the top taxpayer in the health and education categories. 

Manakamana Darshan, the operator of the cable car in Kurintar and Chilime Hydropower were honoured as the highest taxpayers in tourism businesses and energy-oriented industries, respectively. Similarly, Nepal Stock Exchange topped the list among medium-scale taxpayers.

IME Ltd, the first money transfer company in Nepal, was honoured as the highest taxpayer in the remittance and money transfer category, whereas Hansraj Hulaschand and Co was honoured for its contribution to the commodity trade sector.

According to the department, Gorkha Brewery, the producer of Tuborg, Carlsberg and Gorkha beers, Somersby Apple Cider and Red Bull energy drink, was announced as the largest contributor in the value-added tax (VAT) category. Likewise, Mangalam Industries Pvt Ltd – a manufacturer of water supply, plumbing, sanitation, and drainage piping solutions and also the first CPVC Pipes and Fittings manufacturer and leading polymer piping systems manufacturer and exporter from Nepal – was the highest taxpayer company in the manufacturing industry.  during fiscal year 2021-22. According to the press note of the IRD, the award was handed over to chairman Dr Sudarshan Churiwal and director Mrs Shashi Churiwal of the company.

In the last fiscal year, Rs 429.27 billion in revenue has been collected, against the target of Rs 450.34 billion, according to the department press note. “The total number of taxpayers in the country, including the businesses and individuals holding a permanent account number (PAN) reached 4.81 million as of 2020-21, among which, some 3.05 million are individual PAN card holders, by the end of the last fiscal year.”

मागमा आएको संकुचनले राजश्व संकलनमा दबाब

नीजि क्षेत्रले मागमा आएको संकुचनको असर उद्योग क्षेत्रसँगै सरकारको राजश्वमा समेत परेको जनाएको छ । 

राष्ट्रिय कर दिवस २०७९ को अवसरमा अर्थ मन्त्रालयका राजश्व सचिव रामेश्वर दंगाल र आन्तरिक राजश्व विभागका महानिर्देशक रितेशकुमार शाक्यसँग अन्तरक्रिया गर्दै नेपाल उद्योग परिसंघले मागमा आएको संकुचनको असर उद्योग क्षेत्रसँगै सरकारको राजश्वमा समेत परेको जनाएको हो । परिसंघ सचिवालयमा आयोजित “परिसंघमा परिचर्चा” कार्यक्रममा बोल्दै परिसंघका अध्यक्ष विष्णुकुमार अग्रवालले मागमा आएको संकुचनको असर उद्योग क्षेत्रसँगै सरकारको राजश्वमा समेत परेका कारण त्यसको समग्र असर अर्थतन्त्रले भोगिरहेको बताए । उनले अर्थतन्त्रमा देखिएको समस्या समाधानका लागि ब्याजदर घटाउने, समग्र माग बढाउने खालको नीति अलम्बलन गर्नुपर्नेमा जोड दिए। 

परिसंघले गरेको सर्वेक्षण अनुसार उद्योगको प्रकृति अनुुसार ८० प्रतिशतसम्म मागमा संकुचन आएको देखिएको उनको भनाइ थियो । अर्थतन्त्रमा संकुचन बढ्दै जाँदा उद्योगसँगै राजश्व पनि थप प्रभावित हुने र त्यसको प्रत्यक्ष असर पूँजीगत खर्चका लागि सरकारलाई रकमको अभाव हुन सक्ने उनले बताए। 

उनले बहुदर भ्याट प्रणाली लागू गर्न आवश्यक रहेको स्मरण गराउँदै भारतलगायत अन्तर्राष्ट्रिय बजारमा प्रतिस्पर्धी गराउन पनि बहुदर भ्याट प्रणालीको विकल्प नभएकोमा जोड दिए ।  

राजश्व सचिव रामेश्वर दंगालले राजश्व संकलनमा गिरावट आउँदा त्यसले वित्तिय चाप पारेको स्विकारे । अर्थतन्त्रमा परेको दबाबबारे निजी क्षेत्र जानकार रहेको भन्दै उनले राजश्वमा योगदान दिन उद्योगी व्यवसायीलाई आग्रह गरे । अर्थतन्त्रमा स्थायित्व ल्याउने गरी मौद्रिक नीतिले औजार प्रयोग गर्दा बजेटले लिएका उद्देश्य हासिल गर्न दबाब परेको पनि सचिव दंगालको भनाइ थियो । उनले राजश्वमा दबाब पर्दै गए आन्तरिक ऋण उठाउनुपर्ने र त्यसको प्रत्यक्ष असर निजी क्षेत्रमा जाने लगानी योग्य तरलतामा थप दबाब पर्ने पनि बताए। 

आन्तरिक राजश्व विभागका महानिर्देशक रितेशकुमार शाक्यले निजी क्षेत्रलाई दोहोरो कर नपरोस् भन्नेमा सरकार सचेत रहेको भन्दै कर अधिकारी र करदाताबीच भौतिक सम्पर्क नै हुन नपर्ने गरी कर प्रशासनमा सुधार गर्न लागेको जानकारी गराए । यसले कर प्रशासन र निजी क्षेत्रप्रति लाग्ने आरोप सहनु नपर्ने उनको भनाई छ । निजी क्षेत्र नफस्ट्याई सार्वजनिक क्षेत्र पनि अगाडि बढ्न नसक्ने समते उनले बताए। 

उक्त अवसरमा नेपाल उद्योग परिसंघका उपाध्यक्ष राजेश अग्रवालले उद्योगहरु फस्ट्याउन नीतिगत स्थिरता आवश्यक रहेको बताएका थिए। आर्थिक ऐन र औद्योगिक व्यवसाय ऐनका व्यवस्था एक आपसमा बाँझिदा औद्योगिक प्रबद्र्धनमा असर परेको बताउँदै उनले तयारी वस्तु र कच्चा पदार्थ अन्त शूल्क लगाउँदा राम्रो वातावरण नबनेको बताए। यस्तै उनले तीन वटै तहबाट कर संकलन भईरहेकोमा त्यसमा सुधार ल्याउन एकद्धार प्रणालीबाट मात्रै कर संकलन गर्न सुझाव दिए । 

छलफलमा उद्योगी व्यवसायीहरुले कर तथा राजश्वका विषय, अर्थतन्त्रमा सुधार ल्याउन चालिनुपर्ने कदमका विषयमा सुझाव एवं जिज्ञासा राखेका थिए ।

प्रदेश बजेट: वागमतिभन्दा आधा कम कर्णालीको बजेट

संघले बजेट ल्याएको दुई सातापछि सात प्रदेशले बुधबार आगामी आर्थिक वर्षको लागि कुल ३ खर्ब ५ अर्ब २२ करोडको बजेट ल्याएका छन् । 

प्रदेशमध्ये सबैभन्दा ठूलो आकारको बजेट बागमती प्रदेशको छ भने सबैभन्दा सानो आकारको बजेट कर्णाली प्रदेशले ल्याएको छ । बागमती प्रदेशको कुल बजेट ७० अर्ब ९३ करोड रहेको छ भने सबैभन्दा कम कर्णाली प्रदेशको ३२ अर्ब ६१ अर्ब रहेको छ । 

बागमती प्रदेशले चालू आर्थिक वर्षको तुलनामा आगामी आर्थिक वर्षको लागि १३ अर्ब बढीको बजेट ल्याएको छ । आगामी आर्थिक वर्षको लागि बागमती प्रदेशका आर्थिक मामिला तथा योजनामन्त्री शालिकराम जम्कटेलले ७० अर्ब ९३ करोड विनियोजन गरेका छन् । प्रदेशका आर्थिक मामिला मन्त्रीले कूल बजेटमा चालूतर्फ १९ अर्ब २ करोड, पुँजीगततर्फ ४१ अर्ब ५६ करोड, वित्तीय हस्तान्तरणतर्फ ८ अर्ब २३ करोड विनियोजन गरेका छन् । यस्तै, आगामी आर्थिक वर्षको खर्च व्यहोर्ने स्रोतमा कर राजस्वबाट २६ अर्ब ५७ करोड, अन्य राजस्वबाट ६ अर्ब २२ करोड, संघीय वित्तीय हस्तान्तरणबाट २१ अर्ब ६ करोड र चालू आर्थिक वर्षको सञ्चित कोषको बचतबाट १६ अर्ब व्यहोरिने आर्थिक मामिलामन्त्रीले बताए । 

सबैभन्दा सानो आकारको बजेट ल्याउँदै कर्णाली प्रदेशले आगामी आर्थिक वर्ष २०७९-०८० का लागि ३२ अर्ब ६१ करोड ६१ लाख ६३ हजारको बजेट सार्वजनिक गरेको छ । प्रदेशका आर्थिक मामिला तथा योजनामन्त्री बिन्दमान विष्टले बुधबार प्रदेशसभामा चालूतर्फ ९ अर्ब १६ करोड ९९ लाख तथा पुँजीगततर्फ १९ अर्ब ४३ करोड ५ लाख २४ हजार बजेट विनियोजन गरेको बताए । जसमा आन्तरिक राजस्वबाट ७१ करोड, चालू आर्थिक वर्षको बजेट खर्च नभई बचत हुने ४ अर्ब ५५ करोड, संघीय सरकारबाट राजस्व बाँडफाँटबाट प्राप्त हुने ९ अर्ब २ करोड, वित्तीय सामान्यीकरण अनुदानबाट प्राप्त हुने १० अर्ब ७२ करोड र सशर्त अनुदानबाट प्राप्त हुने ५ अर्ब ६९ करोड परिचालन गर्ने लक्ष्य लिइएको छ ।

हालसम्म नाम राख्न असफल प्रदेश १ सरकारले आगामी आवको लागि ३९ अर्ब ७३ करोड ८३ लाख रुपैयाँको बजेट ल्याएको छ । प्रदेशका आर्थिक मामिला तथा योजनामन्त्री इन्द्रबहादुर आङ्बोले प्रदेशसभामा कुल विनियोजनमध्ये स्थानीय तहमा वित्तीय हस्तान्तरणतर्फ ३ अर्ब १५ करोड १५ लाख र संघीय अनुदान बचत फिर्तातर्फ २ अर्ब रहेको बताए । अनुमानित खर्च व्यहोर्ने स्रोतमध्ये प्रदेश सरकारको आन्तरिक राजस्वबाट ४ अर्ब ९८ करोड, राजस्व बाँडफाँटबाट ११ अर्ब ८८ करोड, संघबाट प्राप्त हुने वित्तीय समानीकरण अनुदानबाट ९ अर्ब ८२ लाख, सशर्त अनुदानबाट ८ अर्ब ६९ करोड, समपूरक अनुदानबाट ९२ करोड र विशेष अनुदानबाट ४७ करोड ५० लाख एवं राजस्व तथा वित्तीय हस्तान्तरणबाट ३५ अर्ब ९६ करोड ६० लाख खर्च व्यहोरिने उनले बताए । अपुग बजेट नगद मौज्दातबाट ३ अर्ब ५१ करोड तथा वैदेशिक अनुदानबाट २५ करोड ६८ लाख व्यहोरिने पनि उनले बताए । 

मधेश प्रदेशले आगामी आर्थिक वर्ष २०७९-०८० को लागि पौने ४७ अर्ब रुपैयाँको बजेट ल्याएको छ । बुधबार प्रदेशसभामा अर्थमन्त्री शैलेन्द्र साहले आगामी आर्थिक वर्षको लागि ४६ अर्ब, ८८ करोड करोड, ९ लाख ४६ हजारको बजेट प्रस्तुत गरेका छन् । जसमा उनले चालूतर्फ २१ अर्ब ७६ करोड रहेको छ भने पुँजीगततर्फ २५ अर्ब ८२ करोड र वित्तीय व्यवस्थापनतर्फ १६ करोड २४ लाख विनियोजन गरेका छन् ।

गण्डकी प्रदेश सरकारले ३५ अर्ब ९० करोड ९० लाख बजेट ल्याएको छ । गण्डकी प्रदेशका आर्थिक मामिला मन्त्री रामजी प्रसाद बरालले आर्थिक वर्ष २०७९-०८०को बजेट प्रस्तुत गर्दै चालूतर्फ १३ अर्ब २६ करोड र पुँजीगततर्फ २२ अर्ब १४ करोड एवं वित्तीय व्यवस्थातर्फ ५० करोड विनियोजन गरेका छन् । केन्द्रको अनुदान १६ अर्ब ५४ करोडबाहेक राजस्व बाँडफाँटबाट ९ अर्ब २३ करोड र आन्तरिक राजस्वबाट ५ अर्ब ९ करोड र रोयल्टीबाट ३२ करोड आयस्रोतको अनुमान उनले गरेका छन् । 

लुम्बिनी प्रदेशका आर्थिक मामिला तथा योजनामन्त्री कृष्णध्वज खड्काले आगामी आर्थिक वर्षको लागी ४२ अर्ब ४३ करोड बजेट ल्याएका छन् । ृउनले चालू खर्चतर्फ १३ अर्ब ३२ करोड र पुँजीगततर्फ २४ अर्ब ४७ करोड विनियोजन गरेका छन् । कुल बजेटमध्ये खर्चको स्रोत तर्फ आन्तरिक राजस्वबाट ३ अर्ब १० करोड, राजस्व बाँडफाँडबाट १५ अर्ब ३५ करोड र रोयल्टीबाट ७० करोड हुने अनुमान पनि उनले गरेका छन् । 

यसैगरि, सुदूरपश्चिम प्रदेश सरकारले आगामी आर्थिक वर्ष २०७९-०८० का लागि ३६ अर्ब ७४ करोड बढीको बजेट ल्याएको छ । प्रदेशका आर्थिक मामिला तथा योजनामन्त्री प्रकाश रावलले बुधबार प्रदेश सभामा अगामी आर्थिक वर्षको लागि १२ अर्ब २९ करोड चालू बजेट तथा २४ अर्ब १४ करोड पँुजीगत बजेट विनियोजन गरेका छन् । यस्तै, अन्तर सरकारी वित्तीय हस्तान्तरणतर्फ १ अर्ब ३६ करोड ४० लाख र वित्तीय व्यवस्थापनतर्फ ३० करोड बजेट विनियोजन गरेका छन् ।

कसको बजेट ?

गणतन्त्रका पाँच वर्षअघि र गणतन्त्रपछिको पाँच वर्षमा अर्थतन्त्रमा खासै परिवर्तन आएको छैन । नागरिकले आर्थिक विकासको अनुभूति गर्न तथा सुशासन एवं आफैंले छानेका प्रतिनिधिमार्फत शासन गर्दा मुलुकको आर्थिक विकास हुन्छ भन्ने आशा गरेका थिए । तर, गणतन्त्रका अघिल्ला पाँच वर्षमा औसत ४.५४ प्रतिशत आर्थिक वृद्धि भएकोमा गणतन्त्रपछिका पाँच वर्षमा पनि औसत ४.४ प्रतिशत नै आर्थिक वृद्धि भएको छ ।

संयोगले गणतन्त्र दिवसकै दिन हरेक वर्ष १५ जेठमा बजेट आउँछ । गणतन्त्रका पाँच वर्षमा नेपाली नागरिकले ६ वटा बजेट देखे । भलै कार्यान्वयनमा भने पाँचवटा मात्रै आएको छ । चालू आर्थिक वर्षको बजेट तत्कालीन अर्थमन्त्री विष्णु पौडेलले तथा वर्तमान अर्थमन्त्री जनार्दन शर्माले ल्याएका कारण ५ वटा बजेट भए पनि गणतन्त्रपछिका बजेट कार्यान्वयनको अवस्था हेर्दा गणतन्त्र अघिभन्दा तात्विक भिन्नता छैन । नागरिकमा परम्परागत राजनीतिक दलप्रति चुलिँदो अविश्वासको प्रमुख कारण पनि यही नै हो । नागरिकले महसुस हुने गरी परिवर्तनको अनुभव गर्न पाएका छैनन् । गणतन्त्रको लाभ पाउनबाट चुकेकै कारण पनि नागरिकमा निराशा छ, जुन स्थानीय तहको निर्वाचनको परिणामले पनि देखाएको छ । आइतबार संसद्को संयुक्त बैठकमा अर्थमन्त्री जनार्दन शर्माले दोस्रो बजेट ल्याए । तर, कसको लागि बजेट ल्याए त ?

पछिल्लो समय मुद्रास्फीति बढेका कारण मध्य आय भएका नागरिकका लागि बजेटमा विशेष केही नभएको वरिष्ठ अर्थविद् प्रा.डा. विश्वम्भर प्याकु¥याल बताउँछन् । सरकारले विश्वमा विविध कारणले बढेको महँगीलाई सरकारी कर्मचारीको तलब बढाएर सम्हाल्ने प्रयास त गरेको छ तर, यसले सामान्य नागरिकलाई असर गर्ने उनको तर्क छ । भारतमा पनि मूल्यवृद्धि भइरहेको तथा रुस तथा युक्रेन युद्धका कारण विश्व आपूर्ति शृंखलामा नकारात्मक असर पनि परेका कारण मूल्यवृद्धि ६ प्रतिशतभित्रै राख्न सरकारलाई कठिन भएको उनको विचार छ ।

सरकारी कर्मचारीको तलब १५ प्रतिशतले बढेका कारण मूल्यवृद्धिलाई त्यसले ढाडस हुने अर्थविद् नरबहादुर थापा बताउँछन् । साथै सरकारले व्यक्ति वा परिवारको आधारभूत जीवन निर्वाह लागतलाई दृष्टिगत गर्दै प्राकृतिक व्यक्ति तथा दम्पत्तिलाई आयकर ऐन, २०५८ ले प्रदान गरेका आयकर छुटको सीमालाई वृद्धि गरी प्राकृतिक व्यक्तिको हकमा ५ लाख र दम्पत्तिको हकमा ६ लाख पु¥याएका कारण पनि मध्यम वर्गीयको जीवन सहज हुने उनको अनुमान छ ।

तर, महँगीलाई तह लगाउन आपूर्ति व्यवस्था सहज बनाउने र निगरानी गर्नुपर्नेमा थापा पनि सहमत छन् । नेपालमा प्रतिवर्ष प्रतिव्यक्ति ६० हजारभन्दा कम आय भएका नेपाली निम्न आय वर्गमा पर्छन् । जसको जनसंख्या कूल जनसंख्याको १८ प्रतिशत अर्थात् ५३ लाख छ ।

यस्तै, प्रतिवर्ष प्रतिव्यक्ति ६० हजारभन्दा बढी र ३ लाख २ हजारसम्म आय भएका नेपालीलाई मध्यमवर्गीय नेपाली मानिएको छ । जसमा ४२ प्रतिशत जनसंख्या पर्दछन् । अर्थात् नेपालमा मध्यमवर्गीयको जनसंख्या १ करोड २२ लाख छ । त्यसपछि ३ लाख ३ हजारभन्दा माथि प्रतिवर्ष प्रतिव्यक्ति आय हुने नेपालीलाई सरकारले उच्च आय वर्गमा वर्गीकरण गरेको छ । जसमा ४० प्रतिशत अर्थात् १ करोड १७ लाख जनसंख्या पर्छन् । 

महँगीले निश्चित आय भएका मध्यम वर्गीय १ करोड २२ लाख नेपाली मर्माहत हुँदा बजेटले झन् पीडित बनाएको छ । साथै, स्रोत संकुचन भएका बेला आएको बजेटले सामाजिक सुरक्षामा प्रतिस्पर्धा गर्दै सरकारको दायित्व भने बढाएको छ । राजनीतिक दल तथा सरकारले कसले देशमा बढी दिगो र छिटो विकास गर्ने, गरिबी घटाउने भन्ने प्रतिस्पर्धा गर्नुपर्नेमा कसले कम उमेरमा वृद्धभत्ता दिने भन्ने प्रतिस्पर्धा हँुदै गएको छ । त्यसैले स्रोतको दबाबका बीच सरकारले एकातिर आयकरको सीमा पनि बढाएको छ भने अर्कोतिर वृद्ध भत्ता पाउने उमेरलाई ७० वर्षबाट घटाएर ६८ वर्ष बनाएको छ ।  

वित्तीय समानीकरण अनुदान

प्रदेश : ६१ अर्ब ४३ करोड

स्थानीय तह : १ खर्ब २३ करोड

सशर्त अनुदान

प्रदेश : ५७ अर्ब १ ७ करोड

स्थानीय तह : १ खर्ब ८३ करोड

समपूरक अनुदान

प्रदेश : ६ अर्ब ३० करोड

स्थानीय तह : ७ अर्ब २७ करोड

विशेष अनुदान

प्रदेश : ४ अर्ब ५६ करोड

स्थानीय तह : ९ अर्ब १४

राजस्व बाँडफाँट

१६३ अर्ब ३ करोड

World Bank highlights resource gap to maintain federalism

The World Bank (WB) has concluded resource gap to maintain the three-tier government. Releasing a report, 'Public Expenditure Review (PER) Report on Fiscal Policy for Sustainable Development', the multilateral development partner also said the government should also introduce five key reform measures to support fiscal sustainability and its transition towards green, resilient, and inclusive development.

The World Bank, in its report, has also identified five top priority reform measures. It has suggested on encouraging the update of sub-national spending responsibilities through the intergovernmental grants system.

Supporting exports and job creation through reforms to import duties, strengthening domestic revenue including a review in VAT exemptions, enhancing public capital spending by rolling out the National Project Bank and providing fiscal incentives for a green growth transition are among measures that World Bank has recommended to achieve the goal.

The World Bank has also stated that Nepal has made significant strides in implementing fiscal federalism but excessive dependency of the sub-national governments on the intergovernmental transfers and revenue sharing, which accounts for around 30 per cent of the annual budget, to fulfill their financial demands.

“While federalism is helping bring policymaking closer to the people, it has also increased fiscal spending and exacerbated by the Covid-19 pandemic led to a sharp rise in fiscal deficits and public debt,” the report reads, stressing the importance of strengthening investment processes and fiscal policies for green growth, and fiscal policy reforms to enable Nepal to use its green electricity surplus to mitigate air pollution to protect the health of people and the economy.

With the country’s transition to federalism, expenditure responsibilities have been devolved to subnational governments that are predominantly financed through intergovernmental transfers and revenue sharing. These now account for between 8 per cent and 9 per cent of GDP per year (or close to 30 per cent of the annual budget). 

“This report provides an analytical basis to inform our reform efforts to strengthen federalism and create fiscal space to support our new focus on a green, resilient, and inclusive development (GRID) model,” finance secretary Madhu Kumar Marasini said, adding that it complements our ongoing efforts to refine the fiscal transfer system put in place the systems for monitoring and reporting for a more results oriented and accountable delivery of local services.”

Likewise, World Bank country director for Maldives, Nepal, and Sri Lanka Faris Hadad-Zervosthis said that the human development PER, both of which will help inform the design of World Bank support to Nepal, including through our ongoing support through our various Development Policy Credits."

DRI files cases against 17 firms accused of revenue leakage

 The Department of Revenue Investigation (DRI) today filed cases at the Patan High Court against the proprietors of 17 firms accused of being involved in revenue leakage seeking to recover Rs 2.36 billion from them.

According to a press note issued by the department, it has filed cases against traders associated with Shangrila Trade and Suppliers, Mahalaxmi Trade Concern, Chandan Suppliers, Hanuman Suppliers, Delight Enterprises and GM Import and Export. "Ansar Manjeel Traders, PR Nirman Sewa, New Dip International, DN International, Himalayan Nepal Suppliers, RP Traders and Infratech are also under scrutiny of the department," it reads, adding that the department also filed cases against Nitesh Impex, Morgan Trade Link, Rise Auto Trade and trader Shakir Ali. "Of the accused, the department has sought to recover the largest amount of Rs 1.07 billion from trader Flot Raut Ahir of Shangrila Trade and Suppliers.

Five metropolis announce Rs 37.68 billion budget

Five out of the six metropolitan cities in the country announced a budget of Rs 37.68 billion for the next fiscal year 2021-22, as Lalitpur failed to being the budget due to dispute.

The federal and provincial governments, according to the Constitutions and Fiscal Transfer Act have already brought the budget for the next fiscal year. According to the Fiscal Transfer Act, the local governments must bring the budget by Asar 10 (June 24), and most of the local governments, of the total 753 brought the budget by today.

Kathmandu metropolitan city has the largest budget of Rs 18.95 billion and Birgunj has the smallest one of Rs 3.55 billion for the next fiscal year, among the five that brought the budget today. The Biratnagar Metropolitan City has brought Rs 4.10 billion budget, of which it has allocated some 89 per cent to Rs 3.58 billion under capital heading.

Likewise, Pokhara has brought a budget of Rs 6.27 billion, of which it has allocated some 53 per cent for the capital expenditure. Bharatpur has brought a budget of Rs 4.81 billion for the next fiscal year. After the five years also, the local governments are largely dependent on grants from the federal governments and the provinces.

The Lalitpur metropolis has failed to bring budget due to internal dispute, though there is no opposition in the local level, there has been a lots of politics among them hindering the development activities. They have neither increased their capacity to spend capital budget nor the resource mobilisation to their full capacity. Rather they have been indulged in financial irregularities, and follow the bad practices of the federal government.

Almost all the Metropolitan cities have claimed to have primarily focused the budget in vaccination against coronavirus and other measures to combat the Covid-19 spread.

सात प्रदेशको कुल बजेट दुई खर्ब ६१ अर्ब

सात प्रदेशले आगामी आर्थिक वर्ष २०७८-०७९ का लागि कुल २ खर्ब ६१ अर्बको बजेट ल्याएका छन् । चालू आर्थिक वर्षका लागि सात प्रदेशको कूल बजेट २ खर्व ६४ अर्ब थियो । तर कोरोना कहरका कारण आगामी आर्थिक वर्षमा चालू आर्थिक वर्षको भन्दा बजेट घटेको छ ।

अन्तर सरकारी वित्त हस्तान्तरण ऐनको व्यवस्थाअनुसार असार १ गते प्रदेशले बजेट प्रस्तुत गर्नुपर्ने हुन्छ । त्यसैअनुसार सबै प्रदेशले बजेट ल्याए पनि अधिकांसले वितरणमुखी र पूर्वाधार विकासमा एकदम कम बजेट ल्याएका छन् ।

सबैभन्दा ठूलो अकारको बजेट ल्याउने बागमती प्रदेशले ५७.७२ अर्बको बजेट ल्याएको छ भने सबैभन्दा सानो बजेट गण्डकी प्रदेशले ३०.०३ अर्बको ल्याएको छ । प्रदेश १ ले ३२.४६ अर्ब र प्रदेश २ ले ३३.७९ अर्बको बजेट ल्याएका छन् भने लुम्बिनीले ४०.९५ अर्ब, कर्णालीले ३६.५४ अर्ब र सुदूरपश्चिम प्रदेशले ३०.३३ अर्बको बजेट ल्याएका छन् । 

प्रदेश–१ का आर्थिक मामिला तथा योजनामन्त्री टंक आङ्बुहाङ्ग (लिम्बु) ले मंगलबार प्रदेशसभा बैठकमा आगामी आर्थिक वर्ष २०७८-०७९ का लागि ३२ अर्ब ४६ करोड ९२ लाख रुपैयाँ बराबरको बजेट सार्वजनिक गरे ।

यस्तै, प्रदेश–२ का आर्थिक मामिला तया योजनामन्त्री विजयकुमार यादवले प्रदेशसभा बैठकमा आगामी आर्थिक वर्षका लागि ३३ अर्ब ७९ करोड १४ लाख ३० हजार रुपैयाँ बराबरको बजेट प्रस्तुत गरे ।

बागमती प्रदेशका आर्थिक मामिला तथा योजनामन्त्री कैलाशकुमार ढुंगेलले मंगलबार प्रदेशसभा बैठकमा आगामी आवका लागि ५७ अर्ब ७२ करोड ९ लाख २७ हजार रुपैयाँ बराबरको बजेट ल्याए भने आगामी आवको लागि गण्डकी प्रदेशले ३० अर्ब ३ करोड ९४ लाख २७ अर्ब रुपैयाँको बजेट ल्याएको छ ।

लुम्बिनी प्रदेशका आर्थिक मामिला तथा योजनामन्त्री बैजनाथ चौधरीले लुम्बिनी प्रदेशको आगामी आवका लागि ४० अर्ब ९५ करोड ९७ लाख रुपैयाँ बराबरको बजेट ल्याएका छन् भने कर्णाली प्रदेशले आगामी आवका लागि ३६ अर्ब ५४ करोड ६६ लाख ३६ हजार रुपैयाँ बराबर विनियोजन गरेको छ ।

सुदूरपश्चिम प्रदेशका आर्थिक मामिलामन्त्री प्रकाशबहादुर शाहले आगामी आव २०७८-०७९ का लागि ३० अर्ब ३३ करोड ९४ लाख ५५ हजार रुपैयाँको बजेट प्रदेशसभामा पेश गरेका छन् ।

प्रदेशगतरुपमा तीन प्रदेशको बजेट घटेको छ भने बाँकी चारवटा प्रदेशको बजेट बढेको छ । प्रदेशहरु विधिवत् रुपमा २०७४ फागुनको पहिलो सातादेखि सञ्चालनमा आएका हुनाले आर्थिक वर्ष २०७४-०७५ मा संघीय सरकारले प्रत्येक प्रदेशलाई १ खर्ब २ करोड वित्तीय समानीकरण अनुदान हस्तान्तरण गरेको थियो । सबै प्रदेशले त्यही अनुदानलाई कुल वित्तीय स्रोत मानेर बजेट ल्याएका थिए भने आर्थिक वर्ष २०७५÷०७६ देखि प्रदेशहरुले आ–आफना बजेट बनाउन सुरू गरेका थिए । 

प्रदेशले पहिलो पूर्ण बजेट आव २०७५-०७६ मा ल्याउँदा सात वटै प्रदेशको कुल बजेट २ खर्ब ८ अर्ब थियो । तर, चार वर्षको अवधिमा प्रदेशको कूल बजेट जम्मा ५३ अर्बमात्र बढ्नुमा प्रदेशमा स्रोतको अभाव देखिएको छ । 

यस्तै, आव २०७६-०७७ मा प्रदेशको कुल बजेट २ खर्ब ५९ अर्ब थियो भने आव २०७६-०७७ मा २ खर्ब ५९ अर्ब थियो । कारोना कहरका कारण आव २०७७÷०७८ प्रदेशको कूल २ खर्ब ६४ अर्ब मात्र रहयो ।

आफनो आय कम भएका कारण सबै नै प्रदेश संघीय सरकारको अनुदानमा भर परेका छन् । प्रदेशको खर्च गर्ने क्षमता पनि बढेको छैन भने आय पनि उल्लेख्य नभएका कारण प्रदेशको अस्तित्वमाथि नै प्रश्न उठ्ने गरेको छ । 

DRI files cases against five firms for using fake VAT bills

 The Department of Revenue Investigation (DRI) today filed cases against proprietors of five firms on a alleged charge of making revenue leakage by using fake value added tax (VAT) bills.

According to the DRI, these firms are found to have evaded rs 410 million revenue. Of them, the DRI has sought to recover Rs 41.64 million from proprietors – including Kamal Bahadur Raut of Raut Trade Concerns in Triyuga Municipality-12 in Udayapur. Likewise. proprietor of PRK Trade International Lahuman Majhi of Tamakoshi Rural Municipality in Dolakha has been accused of evading revenue worth Rs 55.68 million. “Three individuals including proprietor of Creta Enterprises Nabikarik Ansari of Belawa Rural Municipality-3 in Parsa have also been accused of making revenue leakage worth Rs 82.46 million,” a press note of department reads.

The DRI also filed a case at the High Court in Patan against proprietor of Minaja International Ram Babu Sahani in Parwanipur of Bara district to recover Rs 21.91 million. “Raman Construction in Raghunathpur of Dhanusha has also been accused of evading revenue of Rs 208.76 million,” the press note reads, adding that the department has sought to slap these firms and their proprietors with fines equivalent to the embezzled amount and the jail terms according to the law.

Government fails to meet revenue mobilisation target of first quarter

 The government has failed to meet the revenue mobilisation target of the first quarter due to slower economy because of the coronavirus impact.

The government has been able to mobilise only Rs 172.36 billion revenue – some 17 per cent of the targeted amount – in the first quarter of the current fiscal year that ended today, though the revenue amount is close to the first quarter of the last fiscal year. In the first quarter of the last fiscal year, the government had been able to mibilise Rs 190 billion in revenue, according to the Financial Comptroller General Office (FCGO). “The revenue government earned during mid-July to mid-October – the first quarter of the current fiscal year – is just Rs 18 billion less than the last year’s first quarter’s realisation of Rs 190 billion.”

The government has revised the target of revenue mobilisation down to Rs 1.01 trillion for the current fiscal year 2020-21, down from Rs 1.11 trillion of the last fiscal year due to possible impact of coronavirus on economy. 

The businesses were completely closed for four months from March 24 hurting the economy. However, after the government itself felt the heat and came short for even to pay salary to the government employees, the government was forced to end the lockdown. The government requested the private sector to resume business activities by strictly following the health and safety protocols. However, the rising coronavirus cases failed the government assumption of economic revival as expected. The closure of industries and businesses made more than 569,653 people lose their jobs, though the then finance minister Dr Yub Raj Khatiwada had been claiming of not very big impact on economy. 

According to the FCGO, the government has spent some 4.26 per cent to Rs 15 billion capital expenditure earmarked for the first quarter. Generally, the first quarter witnesses very less capital expenditure in any fiscal year.

The government is under heavy financial pressure as the revenue mobilisation has been tightly matching the recurrent expenditure and capital expenditure. “Unlike past fiscal years, the government is borrowing from the domestic market from the first quarter,” a Finance Ministry source informed, adding that the mismatch will be balanced by the domestic borrowing.

Imports drop due to restriction, pull trade deficit down

 The country witnessed drop in imports, not due to government import substitution policy but because of the lockdown and restrictive orders.

“In the first month of 2020-21, merchandise exports increased by 8.9 per cent to Rs 9.62 billion compared to an increase of 27.7 per cent whereas merchandise imports decreased by 19.6 per cent to Rs 85.81 billion against a decrease of 11.5 per cent a year ago,” according to the macroeconomic report released by central bank today.

With imports continue to exceed exports, the total trade deficit also narrowed down by 22.2 per cent to Rs 76.19 billion in the first month of the current fiscal year 2020-21, the report reads, adding that such trade deficit had contracted by 13.9 per cent in the same period of last fiscal year. “The export-import ratio increased to 11.2 per cent from 8.3 per cent in the first month of the last fiscal year.”

Likewise, the balance of payments (BoP) registered a surplus of Rs 51.46 billion in the first month of the current fiscal year, against a surplus of Rs 6.05 billion in the same period of last fiscal year, according ot the central bank report. “The current account also remained at a surplus of Rs 25.41 billion against a deficit of Rs 9.34 billion in the same month of the last fiscal year.”

The central bank’s report also reveals that the gross foreign exchange reserves in US dollar terms increased to $12.02 billion in mid-August 2020 from $11.65 billion in mid-July 2020. “With this, the foreign exchange adequacy has increased significantly.”

The foreign exchange (Forex) reserves – based on the imports of the first month of 2020-21 – is sufficient to cover the prospective merchandise imports of 17.3 months, and merchandise and services imports of 15.6 months, the report reads, adding that the ratio of reserves-to-GDP, reserves-to-imports and reserves-to-M2 stood at 38.1 per cent, 129.7 per cent and 33.8 per cent, respectively, in mid-August 2020. “Such ratios were 37.2 per cent, 105.7 per cent and 33.1 per cent, respectively, in mid-July 2020.”

The coronavirus (Covid-19) pandemic has hit the government’s spending and revenue mobilisation hard. The federal government spent – based on banking transactions excluding direct payments and unrealised cheques – Rs 95 billion in the first month of the current fiscal year, against Rs 2.62 billion spending in the same month of the last fiscal year. Likewise, the government has been able to mobilise –based on banking transactions including the amount to be transferred to provincial and local governments – revenue of Rs 58.81 billion, compared to Rs 77.53 billion in the same month of last fiscal year. 

Similarly, the deposit mobilisation and credit disbursement of banks and financial institutions (BFIs) also dropped in the first month of the current fiscal year. “While deposits at BFIs decreased by 0.1 per cent compared to a contraction of 0.4 per cent in the same month of the last fiscal year,” it reads, adding that private sector credit from BFIs decreased by 0.5 per cent compared to a growth of 0.5 per cent in the first month of the last fiscal year.

DRI files cases against six firms for evading Rs 4.18 billion in taxes

In the past three days, the Department of Revenue Investigation (DRI) has filed cases – in Patan High Court – against six firms on the charge of fake Value Added Tax (VAT) bills. They have been alleged to be involved in using fake VAT bills and smuggling of the goods to evade the taxes worth Rs 4.18 billion, according to a press note issued by the department.

Unique Wide International Pvt Ltd operating in Kathmandu Metropolis-1 has been charged for using fake VAT bills to evade the taxes amounting Rs 378 million. The company purchased the fake VAT bills from proprietor of New Unique International Bhuvan Pandey, according to the department, which sought to recover the amount from the duo and the jail penalty as per the rule. The department on Monday filed the case against the owner of Unique Wide International Pvt Ltd and New Unique International and a chartered accountant for dodging revenue and using fake VAT bill, the press note reads, adding that Jeevan Basnet – the owner of these firms that dodged the revenue and Bhuwan Pandey is the chartered accountant, who supplied fake bills to these firms.

“These firms dodged VAT worth Rs 124.22 million, income tax worth Rs 228 million and capital gains tax worth Rs 25.74 million,” according to director general at the department Dirgha Raj Mainali.

The department has sought to confiscate Rs 378 million from them and a fine equivalent to that amount as per the Revenue Leakage (Investigation and Control) Act, he said, adding that the department has so far filed cases worth around Rs 8 billion against people in fake VAT bill scandals for irregularities. “We are investigating fake VAT bills worth around Rs 14 billion.”

Likewise, the department today filed a case against High Tech International – that operates in Sorhakhutte of Kathmandu as it was found to have evaded taxes of Rs 2.42 billion through smuggling of goods. The department has accused the firm of not making the customs declaration of most of the imported goods and evaded taxes through under invoicing.

The department also sought to recover Rs 1.39 billion from three firms – JSS Mobile and Services Pvt Ltd, Shree Shyam Impex and Shree Shyam Baba Enterprises – which are operating their businesses in Sanepa of Lalitpur district. They have also been charged for smuggling of goods hurting the state treasury.

The department said that its team confiscated hard cash of Rs 9.90 million earned from smuggled gold in Bhairahawa, in a separate incident. The department has charged proprietor of Sony Jewelers Sunil Sunar and his helper Amit Pariyar and started further investigations.

Government restricts movement of people and vehicles in night

The government has restricted the movement of people and vehicles from 10 pm to 5 am except for emergency purposes.
Issuing a new directive ‘Lockdown Security Standards-2020,’ today, the Ministry of Home Affairs said that people will not be allowed to walk outside their homes in the nighttime from 10 pm to 5 am. “The new directive is aimed at maintaining high security alert as the lockdown is being gradually eased,” the directives reads, adding that Nepal Police personnel will be monitoring people's movement from 10 pm to 5 am. “For factories and industries, the government has limited the number of workers to only 10 at a given time,” it adds.
The government has brought the directives after 87 days of lock down to contain the spread of coronavirus (Covid-19). The government imposed the lockdown from March 24, and has been extending it time to time. But from June 15, the government has relaxed lockdown depending on the places and number of cases. The country has lost over Rs 600 billion in the last 87 days, making the government broke as the lockdown halted the revenue mobilisation. One one hand the economy is going to register negative growth and on the other poor people have started dying due to hunger as they have been out of work since last three months. The government's mishandling of the pandemic has also bleed the government coffer as it has no money to pay salary to the government employees from next month. 
A Cabinet meeting on June 10 has tasked the Home Ministry to prepare a security modality to manage the lockdown as it will be gradually eased. The directives is issued as part of government strategy to ease the lockdown in different stages.
From June 15, the government has allowed to operate private vehicles – both two-and-four-wheelers – under odd-even number system in 73 districts – except Sarlahi, Rautahat, Kapilvastu and Dailekh districts – from five in the morning till ten at night.
The directive has also limited the number of people in goods carrying vehicles to only two.
Likewise, the new directive has also barred more than 15 persons to gather for in religious and cultural gatherings, including marriages and funerals, at one place. Likewise, more than 10 persons will not be allowed to gather at one time in factories, manufacturing companies and construction sites, the directives reads, adding that the security agencies and the district administration offices in all 77 districts have been asked to strictly implement the directive. “The ministry has also instructed the concerned agencies to fully implement the 'Health Protocol’ like including physical distancing rule of at least 2 metres between two persons, issued by the Health Ministry while enforcing the rule.”
The ministry directed the authorities to take action against those who violate the rule under the existing laws, including Essential Services Operation Act, 1957, Infectious Disease Act, 1964, National Criminal Procedure (Code) Act, 2017, and Local Administration Act, 1971.

Government goes bankrupt

Though, incumbent finance minister Dr Yuba Raj Khatiwada – issuing a whitepaper two years ago intending to tarnish the earlier government’s image – claimed that the government coffer was empty and the economic indicators were worse, he has finally succeeded to empty the treasury and worsen the economic indicators further, by himself.
As Khatiwada presented his third budget in a row – the only second lucky finance minister to do so after 1990 – the government has no money to pay salary to its employees because of its failure in mobilising the revenue. “The government is having a cash crunch to manage immediate liabilities due to a shortage in revenue mobilisation also because of nationwide lockdown imposed since last 82 days,” a senior government employee at the Finance Ministry confirmed.
The government has imposed nationwide lockdown since March 24 that has stagnated all the businesses activities across the country. The government needs around Rs 40 billion – every month – to meet mandatory liabilities like regular salary to its employees, but it has been able to mobilise around Rs 15 billion from the major source – customs offices – only in a month, according to the Finance Ministry official. The government coffer has only around Rs 50 billion at present, which is enough for the salary of next month, which is the last month of the current fiscal year,” he said, adding that from the first month of the next fiscal year, the government will not be able to pay regular salaries to its staff also due to Supreme Court move to restrict the government to collect tax during the lockdown. “The Supreme Court has issued interim order to the government not to push the private sector for tax during the lockdown and allow them 30 days after the lockdown, is fully relaxed, to clear tax dues.”
The Finance Ministry has, however, moved to the Supreme Court to vacate the interim order as it will fail to pay salary, if it is not allowed to mobilise tax this month. The government imposed a nationwide lockdown on March 24, closing industries, businesses, suspending ground and air travel, and has asked to pay tax within June 21. Some entrepreneurs went to Apex Court asking an interim order against the Inland Revenue Department (IRD) – under the Finance Ministry – diktat.
According to the Financial Comptroller General’s Office (FCGO), the revenue mobilisation as of today stands at only 58 per cent of the target that is Rs 1.11 billion. Although the government keeps high hopes on gathering a significant amount in taxes in the final month of the fiscal year, it is likely to face a huge shortfall due to Supreme Court’s interim order this time.
The government has an option to transfer the money from various funds into its treasury to meet its necessary liabilities including salary for government workers, pensions for retired employees, social security allowance for the elderly and disadvantaged groups, and payments to be made for internal and external loans.
Citing the adverse situation in revenue mobilisation, the government expects to receive Rs 299.50 billion from external debt and Rs 225 billion from domestic borrowing mainly to meet the recurrent expenditure. But the government capacity to absorb the external debt is limited due to structural and procedural problems, whereas more domestic borrowing will squeeze private sector’s capacity to borrow hurting the economic growth. “Likewise, borrowing to pay salary to the government employees will also send a wrong message as the private sector is also not able to pay salary to its employees,” the official said, adding that more domestic borrowing – for administrative purposes – could also result in an exorbitant rise in market prices.
While presenting his third budget on May 28, Khatiwada claimed that the government will be able to mobilise Rs 827 billion revenue, contain inflation under 7 per cent, and achieve 7 per cent economic growth.

After huge pressure, government extends tax clearance date till June 21

The government has backtracked from its earlier decision – within 24 hour – on payment of individual and business taxes and deferred the deadline to pay taxes and submit tax details by 15 days to June 21 after a huge pressure from the private sector and the main opposition Nepali Congress (NC).
According to the new notice by the Inland Revenue Department (IRD) published today, the deadline is extended keeping in mind the nationwide lockdown and risk of coronavirus transmission. The government has imposed the lockdown till June 14 – by extending it for the eighth time since March 24 – to contain the spread of coronavirus. And the department yesterday published a notice ordering businesses and individuals to clear their tax dues by June 7 as in the normal times. The department – in the notice – asked businesses and individuals to submit the second instalment of income tax of the current fiscal year by mid-June and value added tax (VAT) and excise duty till mid-March and mid- April, respectively, by June 7. “The failure to meet the deadline for filing tax returns and clearing tax dues of previous months will result in charges,” the notice read.
But the notice only infuriated private sector, citizens and main opposition party. The main opposition party Nepal Congress – issuing a press note signed by party president Sher Bahadur Deuba – has urged the people to gently disobey the government diktat to clear tax by June 7, as the country is still under lockdown since last 72 days bleeding the economy. Nepali Congress alleged that the government has been terrorising private businesses, labourers, and farmers with tax compliance instead of introducing a special relief package to them.
The businesses have remained shut for almost two-and-a-half months since March 24, and the movement has been curtailed by the government, which is forcing the people to pay tax by June 7 within lockdown period, said an angry entrepreneur. The lockdown has been imposed till June 14.
After the criticism from different sectors of the society, the department in its new notice today said that the deadline to submit tax details, income details and payment of taxes has been extended to June 21. The department has extended the deadline to pay value added tax, excise duty, tax deducted at source (TDS) under income tax, education service tax, telephone ownership fee, and telecommunication service fee to June 21 from the previous deadline of June 7, according to a notice issued today by the department.
According to the revised decision, businesses and individuals are now required to submit the second installment of income tax of the current fiscal year by June 29, the new notice reads, adding that VAT and excise duty need to be submitted by June 21.
This is the third time that the government has extended the deadline to pay taxes as the country continues to remain in lockdown to prevent the spread of Covid-19, which has claimed nine lives and infected over 2,300 people across the country till date.
The infuriated private sector representatives – including Federation of Nepalese Chambers of Commerce Industry (FNCCI), Confederation of Nepalese Industries (CNI), and Nepal Chambers of Commerce (NCC) – has criticised the government decision for exerting undue pressure on the private sector to clear taxes despite the continuation of lockdown.
The deadline extension followed a request from the private sector representatives to the finance secretary Shishir Kumar Dhungana during a meeting with Finance Ministry officials today morning. “The government decision to extend the deadline is a move towards a positive direction,” senior vice-president of the FNCCI Shekhar Golchha said, adding that the private sector has asked that the deadline be extended till the end of current fiscal year, until mid-July. “Most of the businesses are not in a position to pay taxes immediately as there is still a lack of cash flow due to the fact that the markets are closed.”
The VAT and excise duty are taxes that the business people have collected in the market but they have already been spent. “So, they need to raise cash from the market to pay the tax authority,” he added.
The government, on the other hand, is under pressure to mobilise revenue as the government coffer is almost empty, and from the beginning of the new fiscal year 2020-21, the government may not be able to pay salary to government staff due to huge deficit in revenue mobilisation because of its failure in collecting taxes.
According to the Finance Ministry, the government has only collected Rs 657 billion so far, against a target of Rs 967 billion by mid-June. “Though Dr Yuba Raj Khatiwada is the second lucky finance minister to present three budgets in a row – after 1990 – he has failed, for the second consecutive years, to mobilise the revenue and also spend budget,” sources at the Finance Ministry claimed that the stronger government – in the history of Nepal – led by KP Oli has failed to create business friendly environment and promoted ‘some businessmen’ for the benefit of the party. “The stable, stronger and powerful communist government is promoting crony-socialism rather than taking care of people, which has resulted in the revenue deficit since last two fiscal years after Khatiwada took charge of the Finance Ministry.”

Finance Committee recommends to bring Rs 1.7 trillion budget

The Finance Committee – under the Federal Parliament – today recommended government to bring an expansionary budget of Rs 1.7 trillion, though the government has fall short of resources in the current fiscal year and has no means to meet the target in the next fiscal year too.
Despite calls from economists to not increase the size of budget from the current fiscal year’s figure, the Committee said that the the budget ceiling of around Rs 1.7 trillion – for the next fiscal year – has already been fixed before the pandemic. “It is not possible to reduce the size of the budget as the government has to provide relief to the industries, businesses and workers affected by the coronavirus.”
The budget for the current fiscal year stands at Rs 1.5 trillion, though the finance minister Dr Yuba Raj Khatiwada has revised it downwards – during the mid-term review – to Rs 1.3 trillion due to its inability in spending and also mobilising the revenue. The government is staring at Rs 300 billion shortfall to the revenue mobilisation target, whereas it has also failed to spend due to inefficiency, and lack of focus, despite having the majority and stable government in the history of the country.
The Committee also suggested finance minister Khatiwada set a target of mobilising Rs 1 trillion revenue without increasing the tax rate, which is going to be the tough task. 
The committee – which has all the former finance minister as its members – has also suggested mobilising bilateral and multilateral foreign aid worth Rs 1 trillion and domestic borrowing equivalent to 6 per cent of the GDP. “The deficit amount should be mobilised through the foreign loan,” it suggested. But the foreign loan and aid also seems not to be increasing because of coronavirus impact on the bilateral and multilateral development partners, and also due to government’s inability in spending. The government’s institutional capacity has been eroding over the years and it has not been able to spend more than 80 per cent of the development budget in previous years too.
The majority government has neither been able to spend not mobilise revenue according to its own target due to its failed vision, mission and goals, rather is promoting crony capitalism, though the government is led by the communist party that claims to create socialism oriented economy.
The parliamentary committee has also requested the government to bring a financial package worth 5 per cent of the Gross Domestic Product (GDP) – which comes to around Rs 188 billion – through the budget to mitigate the negative impact of the Covid-19.
The government is going to bring budget for the next fiscal year 2020-21 on May 28, Jestha 15 according to the Bikram Sambat calendar, as is directed by the Constitution.
The livelihoods of thousands of people have been badly hit by the pandemic, particularly the poor and migrant workers, many of whom have lost their jobs. The government has enforced lockdown from March 25 to contain the pandemic from spreading in the society. On Sunday, the government extended the lockdown till June 2, continuing to suspend ground and air travel, shutting down most of the industries, except essential ones.
Due to lockdown the economy has been projected to shrink to 2.27 per cent in the current fiscal year, according to the Central Bureau of Statistics (CBS). The government has targeted to meet 8.5 per cent economic growth in the budget for the current fiscal year 2019-20. Though, the Covid-19 pandemic has been blamed for the lower economic growth, the government was not going to meet the target anyway, according to the economists, who are also claiming that Nepal's economy is also headed for a catastrophe with no end in sight to months-long paralysis as the virus lockdown keeps getting extended. “The economy could grow at 1 per cent or it could go into the negative territory also due to prolonged lockdown,” they claimed.
The prolonged lockdown has also cost millions jobs and small and medium enterprises (SMEs) are also feeling the heat. As most of the workers in the industrial and business enterprises have become jobless, the committee has suggested that the government pay one-third of their salaries and one-third by the industries and enterprises.
The Committee has also suggested providing relief and concessions to the most affected hotels, restaurants, tourism businesses and public transport that cannot come into operation immediately.
The parliamentary committee has suggested to give high priority to health and agriculture in the budget. “The three governments – federal, provincial and local – should prepare health infrastructure in a coordinated manner by allocating 10 per cent of their budget for the prevention, control and treatment of coronavirus,” it suggested, asking the government to allocate at least 15 per cent of the total budget for the agriculture sector for its commercialisation and modernisation.

Beverage, cigarette industries ask government to let them open business

Nepal Liquor and Cigarette Industries’ Association today urged the government to allow supplies of beverage and cigarette by easing lockdown.
Issuing a press note today, they also urged the government to allow beverage and cigarette industries and suppliers to operate at least a few hours daily. Beverage and cigarette Industries contribute more than Rs 10 billion to the national coffer annually and provide employment to more than 2 million people, the press note reads, adding that the lockdown has, however, made millions of people jobless. “It will not only hit the daily lives of beverage and cigarette suppliers but also the economy.
The association has also drawn the government’s attention towards the illegal production and distribution of liquor during the lockdown, which will not only bleed the government coffer but also create health hazards.
The government has though targeted to mobilise Rs 111.2 billion revenue in the current fiscal year, the lockdown of almost two months has hit the government target. However, the government is still optimistic of mobilising Rs 800 billion, according to the Finance Ministry.

Trade deficit drops but government struggles to meet revenue target

Though, the trade deficit has decreased – as it has wished – it failed to meet the revenue mobilisation putting the Finance Ministry under pressure to manage resources.
The Department of Customs data reveals that the trade deficit – in the first five months of the current fiscal year – has widened by only 6.3 per cent to Rs 533.64 billion as the export jumped by around 27 per cent to Rs 47.61 billion, whereas imports fell by 4 per cent to Rs 581.25 billion. “Processed soybean oil and palm oil have knocked juice, jam and footwear off the list of largest exports to India, pushing the exports up,” the department data reveals. However, Nepal does not produce any soybean or palm oil, and traders import crude oils from Brazil, Argentina, Ukraine, Indonesia, Australia and other countries which they process and export to India without paying a penny in tariffs.
Under the South Asian Free Trade Area (SAFTA) agreement, zero tariffs are levied on goods exported from underdeveloped countries like Nepal, and Nepali traders have been importing crude palm oil from third countries by paying minimum customs duty, and then exporting the finished product to India free of customs duty.
The government, but, failed to meet revenue mobilisation target also due to low imports as the revenue from imported goods shrank by Rs 6 billion between mid-July and mid-December. The department's data reveals that the government collected import taxes worth Rs 150.81 billion, down by Rs 5.52 billion from Rs 156.33 billion collected during the same period last year.
The government has set a target of collecting 45 per cent of the total targeted tax revenue through tariff on imported goods. In the first five months, customs offices collected only 34 per cent of the annual target to collect Rs 447.59 billion from import tariffs. “Out of the total import taxes, the government has targeted to collect Rs 196.62 billion in value added tax (VAT), Rs 187.30 billion in customs and Rs 63.67 billion in excise imposed on the imported goods. But according to Financial Comptroller General Office (FCGO) data, the overall tax mobilisation – as of December – stood at a mere 31.24 per cent of the targeted tax revenue of more than Rs 1 trillion.
In the last fiscal year 2018-19, the government had set revenue collection target at Rs 945 billion, which was later revised to Rs 860 billion. However, the government even missed the revised target by almost Rs 25 billion, according to the FCGO data.
And this fiscal year too, finance minister will fail to meet revenue mobilisation target also due to his own policy to discourage imports of luxury items and automobiles.