FNCCI, NCC, CNI spring a surprise by welcoming budget whole-heartedly
June 5, 2019 03:30 AM NPT
No critical comment on the budget for FY2019/20
KATHMANDU, June 5: Representative bodies of private sector have surprisingly refrained from making critical comment on the budget even though it lacks any specific program to increase spending and drive the growth of private sector and boost investments.
Federation of Nepalese Chambers of Commerce and Industry (FNCCI), Confederation of Nepalese Industries (CNI) and Nepal Chamber of Commerce (NCC) has issued press statements in full support of the budget.Unlike in the past years, none of the three bodies of private sector spoke made critical comments on the budget. FNCCI, which issued its press statement on Tuesday after a week of the budget announcement, fully supported the budget. It has only called for reduction in excise duty of some products.
Office-bearers and executive members of the FNCCI held discussion on the budget on Monday. In the meeting, many executive members criticized provisions like imposition of VAT on transportation and the requirement to file VAT by suppliers and contractors of any public entities immediately after transaction instead 25th day of every month, an executive member told Republica. The provision that restricts enterprises from counting payments made to laborers as expenses (this means they will have to pay TDS on the expense) and mandatory Permanent Accounts Number (PAN) for all employed people, including laborers or short term employee, were some of the issues discussed in the meeting, according to the executive member.
But none of the issues were included in the press statement.
Talking to Republica, FNCCI President Bhawani Rana claimed that the executive committee meeting discussed all the issues in the budget. "Our press statement is the voice of all our office-bearers and executive committee members," she added.
A former executive member of FNCCI said that the silence of the apex body of Nepali private sector at a time when the private sector is facing multiple problems is surprising. "All the office-bearers there (FNCCI) have stopped speaking the truth. They simply want to be in a comfortable situation by not speaking against a powerful government," the executive member added.
CNI and NCC had issued their respective press statements a day after budget announcement. They also didn't have any comment on the budget.
Economists say that all professional bodies, mostly of industrialists, have remained supportive of the budget as most of their industries are going to be benefitted by the protectionists' policies.
The government's incentive schemes have covered most of the industrial sectors like sugar mills, and cement and agro-processing industries, among others.
Economist Poshraj Panday said that the silence of the private sector was surprising even though some provisions in the budget are sure to affect their business. "Even NCC expressed happiness on the budget as business of its members will be affected most because of hike taxes of most of the imported goods. It is also likely to trigger smuggling.
NCC is largely an organization of traders.
"They may have some sort of unknown fear of the powerful government. This could have prevented them from making any critical comment on the budget," he added. "At least, some could have commented on the tax collection targets as they are the taxpayers."
Nepal's tax to GDP ratio is 25 percent. This means the government is collecting Rs 25 tax of each Rs 100 of the GDP. Despite collecting high taxes, pace of development is the slowest among neighboring countries.
Bangladesh and India have only about 10 percent tax to GDP ratio, but their pace of development is faster.
“It does not indicate good sign if the private sector fails to talk on valid issues like they have now,” added Pandey.