In a program organized on Tuesday to present CNI´s recommendations on upcoming budget, the consortium of Nepal´s industries said additional exemption in income tax was necessary for consumers to maintain their present purchasing capacity in the light of high inflation. [break]
However, Finance Secretary Rameshwore Khanal said it will not be possible to bring policies that might increase disposable income as one of the policies of the upcoming budget will be to curb consumption to address alarming deficit in the Balance of Payment.
Finance Minister Surendra Pandey urged the industrialists not to press the government to relax taxes as it is struggling hard to increase its financing on capital expenditure from domestic resources.
He also claimed that some policy intervention made during the last fiscal budget had greatly helped to increase capital expenditure that is expected to go up to 87 percent of the total allocations.
He also dropped hints that the policy of gradually allowing Nepali for foreign investments, which was adopted last year, might be reversed as the economy is passing through liquidity shortage and foreign currency reserve is also depleting.
The recommendations presented to Finance Minister also urged the government to lower corporate tax to 20 percent to protect industries struggling for survival and stressed that the government should encourage private sector investment on construction of agricultural warehouses.
CNI also identified political instability, illiquid market, fragile law and order situation, lack of power, labor unrest and lack of infrastructure as major obstacles to industrialization drive.
It also demanded the government to raise single obligatory limit to industries that have absorbed investments worth more than one billion rupees and urged the government to exempt dairy industry from 13 percent VAT.
Speaking on the program, CNI President Binod Chaudhary expressed concern over the continuing erosion in business doing environment, which has resulted in increase in cost of production. Because of rising cost of production, the competitiveness of our exportable products is decreasing, he added.
The biggest challenge before us at present is reviving investors´ confidence, Chaudhary stressed.
He also said the lack of ownership of development products among the ministries is resulting in pessimistic outcomes of the mega development projects and demanded clear government policy over the roles of private sector, government sector and co-operatives in the upcoming budget.
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