Kathmandu Valley faces shortage of potatoes and onions after traders halt supply

Published On: December 7, 2023 10:05 PM NPT By: Republica  | @RepublicaNepal

Traders launch protest against the government’s decision to impose VAT on these agricultural products  

KATHMANDU, Dec 7: A shortage of potatoes and onions has started to appear after traders stopped selling the vegetables in the Kathmandu Valley, citing the government’s decision to impose value added tax (VAT) on these agricultural products.

Ramchandra Sedhai, a vegetable seller at the Dhumbarahi Vegetable Market, said they are unable to sell these agricultural products after the Potato Onion Traders Association (POTA) stopped supplying the products to retailers. “The Association has warned to slap fines of up to Rs 100,000 if any retailer is found selling the products,” Sedhai said.

Potatoes and onions were previously untaxed. The government through the budget for this fiscal year announced to levy VAT on these daily essentials. “It is not fair that the government adds up the burden of tax on these products which are largely consumed in Nepali kitchens,” Sedhai said.

Potatoes, onions and other daily consumable farm products are exempt from VAT under the Value Added Tax Act of 1996. But while preparing the new budget, the government amended the law through the Financial Bill 2023 and removed 170 goods from the tax-free list. The Financial Bill has imposed a 13 percent VAT on imported onions, potatoes, garlic, peas, frozen green leafy vegetables, collard greens, beans, spinach, sweet corn and other green vegetables.

Immediately after the budget announcement, traders and consumer rights activists launched protests against the government decision. But the government has not annulled its decision till the date.

Prakash Gajurel, general secretary of POTA said they were compelled to launch protests after the government’s tax authority started taking action against the traders on the pretext of not abiding by the government-enforced law. According to him, they have stopped selling these items for the past three days.  

Citing the surging import of potatoes and onions, the government slapped a 13 percent VAT on these kitchen items. However, the government authorities have been creating hassles even on domestically produced items, according to traders.

Nepal imports potatoes, onions and other vegetables, fruits and other food items from India and other countries as the locally produced goods are not sufficient to meet the market demand. The country imported 180,190 tons of onions worth Rs 6.75 billion in the fiscal year 2022/23. Similarly, the import of potatoes accounted for over Rs 8 billion in the year.

Sabnam Siwakoti, spokesperson for the Ministry of Agriculture and Livestock Development, however, said that the ministry has no information about the traders halting the supply of potatoes and onions. “To address the traders’ grievances, we wrote to the concerned authorities including the Inland Revenue Offices to facilitate sorting out local products from imported items while imposing the tax,” Siwakoti said.   


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