Rise in import duty, VAT, excise duty, agriculture service duty and other related duties levied on transactions and transport of imported goods was the major reason behind increment in revenue collection during the review year. [break]
Rajan Khanal, joint secretary at the Ministry of Finance (MoF), said the government mobilized revenue worth Rs 296 billion, or around Rs 810 million a day, in the last fiscal year.
The government had set the target of increasing revenue by 19.5 percent in 2012/13.
Tanka Mani Sharma, director general of Inland Revenue Department (IRD), said stringent measures to collect revenue and tax payer education campaign launched by revenue administration, significant reductions in strikes as well as other disruptions in economic activities over the year and double digit rise in imports are the major reasons behind higher revenue mobilization.
Similarly, appreciation of US dollar against Nepalese rupees resulted in the higher import bills, leading to higher duty collection.
“Though belated budget hampered economic activities, we could increase revenue by over 21 percent compared to the collection of last fiscal year. Surge in import bills drove up collection of mainly customs duty, VAT and excise duty,” Sharma told Republica on Wednesday.
The government collects significant chuck of revenue from VAT, income tax and import duty. Data compiled by the Trade and Export Promotion Center (TEPC) shows imports rose by 22.7 percent to reach Rs 549.63 billion during the first eleven months of 2012/13. Double digit rise in imports of iron/steel, petroleum, machineries, vehicles, cereal products jacked up the imports bill, leading to the higher customs duty collection.
Revenue collected from customs offices in the form of import duty, VAT, excise duty, agriculture service tax holds significant share in the total revenue mobilized in the country. Around two-thirds of the total collection of VAT -- the largest source of revenue -- is collected from imported goods. Similarly, around half of the total excise duty is collected from imports.
“There is no need to be excited due to surge in revenue collection as we are highly dependent on imports. Revenue contribution from domestic economic activities has been going down which is not a good sign,” Keshab Acharya, former chief economic advisor for the Ministry of Finance, told Republica.
Given the increasing dependence on imports for revenue collection and slackness in economic activities within the country, the government has set a target of collecting Rs 354.5 billion in revenue, up by Rs 58 billion compared to the revised estimation of fiscal year 2012/13.
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