Revenue collection hardly meets 50 percent of the immediate liabilities, says Finmin Khatiwada
KATHMANDU, June 15: The government is having a cash crunch to manage its immediate liabilities due to a heavy fall in revenue collection during the nationwide lockdown that has almost stagnated businesses activities in the country.
Speaking at the Federal Parliament on Sunday, Finance Minister Yuba Raj Khatiwada said that the government currently needs an average of Rs 40 billion a month to meet its mandatory liabilities that have to be settled immediately.
According to him, the government now collects around Rs 15 billion per month from the customs offices. “While an additional small amount is generated out of the internal taxes, the government has been struggling to manage the remaining amount of the recurrent expenditure,” said Khatiwada.
The records maintained by the Financial Comptroller General’s Office shows that the revenue collection as of Saturday stood at only 58 percent of the targeted amount of 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 leave the government with a significant shortfall of the financial resources than the targeted ones.
Khatiwada said the government is now obliged to transfer the money from various funds into its treasury to meet its liabilities. “In addition, the government is also considering mobilizing its fixed deposit for the purpose.”
The government has not moved an inch to revise the tax rates despite receiving wide-spread criticism regarding its budget. “It is not appropriate to revise the income tax including corporate tax rate every year. Tax rates have also been fixed to comply with various acts like Cooperative Act, Foreign Investment and Technology Transfer Act and Industrial Enterprise Act,” Khatiwada defended the allegation of high tax rates at a time when the economy is devastated by coronavirus.
The fact that the government faces an acute cash crunch is also made clear as the government pressurizing the taxpayers to clear the tax dues on time. Going against the government’s firm decision on tax collection due date, the Supreme Court issued an interim order to the government to make the necessary arrangements for paying tax within 30 days from the date when the lockdown is fully relaxed. However, the Ministry of Finance has filed a petition at the Supreme Court seeking to vacate the apex court’s recent order that stayed the government’s decision.
Khatiwada said the government could have more cushion in the last month of the current fiscal year commencing from Monday. Normally, in this month, the government receives more tax revenue as business entities observe financial closures. “In addition, as the lockdown has been eased and the import is also moving toward normalcy, the revenue collection can be expected to yield more funds to the government.”
Citing the adverse situation in revenue collection, 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. Lawmakers however said that the huge amount of domestic borrowing for administrative purposes could result in an exorbitant rise in market prices, pushing mainly the grass root consumers to the receiving end.