The apex body of Nepal´s private businesses has also asked the government to limit size of upcoming budget to Rs 305 billion, Rs 30 billion less than the government´s initial proposal. It has proposed the government to target only 10.5 percent growth in revenue in the next fiscal year and aim to mobilize only Rs 190 billion from different revenue sources. [break]
"Existing trend of unaccountable spending of recurrent budget must be reversed. We suggest the government to slash recurrent expenditure to Rs 140 billion in 2010/11 from Rs 160.63 billion of the current fiscal year," said Pradeep Man Vaidya, chairman of Tax and Revenue Committee of FNCCI.
As for the development spending, FNCCI has demanded the government to raise it to Rs 145 billion, which is some Rs 100 billion more than what the government spent in the first eleven months of the current fiscal year.
FNCCI also expressed concerns over the existing high inflation and suggested the government to increase income tax exemption bracket to Rs 200,000 for an individual and Rs 300,000 for family men. It also urged the government to put in place social security schemes for the taxpayers, something which it promised while levying 1 percent social tax in 2009/10 but has failed to implement it so far. The apex business body also suggested the government to lower corporate tax by 5 percentage points to 20 percent.
Despite government´s refusal, the business leaders continued to push for the introduction of multiple Value Added Tax (VAT) rates and VAT exemption for agricultural, tourism, hydropower and natural resources based industries.
Vaidya, who handed over the recommendations to Finance Minister Surendra Pandey, also sought VAT exemption on brick kiln industry, cold storage, and diesel and furnace oil imported by the industries.
FNCCI has also urged the government to provide 10 percent tariff protection for domestic industries by levying low customs duty on import of raw materials compared to the import of finished goods. It also asked the government to withdraw export duty and introduce exports subsidy for the promotion of exports.
Among others, FNCCI President Kush Kumar Joshi urged the government to improve law and order and power supply situation for creating business doing environment in the country.
´Slash CRR´
FNCCI also demanded the government to pledge soft refinancing facility to export-oriented and import substituting industries so as to squeeze the sharply inflated trade deficit.
Under its recommendations for the monetary policy for the next fiscal year, the apex business body also urged the government to increase the transaction limit for income disclosure provision set under Anti-Money Laundering Act to Rs 2.5 million from the existing Rs 1 million.
"We believe this revision will help banks attract money that has remained out of the banking system so far due to fear over government seeking their income sources," said Vaidya.
Apart from this measure, which FNCCI officials viewed would help fight long-running liquidity crunch, they also asked the government to slash cash reserve ratio (CRR) to 4.5 percent from existing 5.5 percent.
FNCCI also asked the government to review ceiling imposed on real estate and housing loans, arguing that the revision was necessary to revive confidence in the housing industry.
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