Revenue collection falls short by Rs 104b in first half

Published On: January 16, 2020 11:24 AM NPT By: Republica  | @RepublicaNepal

Finance ministry hopeful of recovery in second half

KATHMANDU, Jan 16: The government revenue collection fell short of the target by Rs 104 billion over the first half of the current fiscal year that ended on Tuesday.

The statistics of the Financial Comptroller General Office (FCGO) shows that the government collected only Rs 433.15 billion by mid-January, against the target of mobilizing Rs 537 billion.

The government has set an ambitious target of a 30% growth in revenue in the current fiscal year. But, the revenue collection data shows that revenue grew by only 13% in the review period. 

According to officials of the Ministry of Finance, the inability to meet the target was largely due to reduction in customs revenue collection. Shishir Kumar Dhungana, revenue secretary at the ministry, told Republica that the reduction in imports of revenue-yielding goods has affected revenue collection to some extent.

Data compiled by the Department of Customs also shows that Birgunj Customs Office – one of the major trading gateways of the country – missed the revenue target by 32% in the first quarter alone.

The government from this year has targeted to switch to domestic economic activities from external sector to maintain its tax collection. As one of the measures, the government has tightened bank lending for import of luxury items including automobiles. 

The statistics shows that the government, however, met the revenue target in the sixth month of FY2019/20 (mid-December to mid-January). According to the ministry, the government has set target of collecting Rs 135 billion in the month, while the actual collection reached Rs 137.50 billion.

Dhungana said he was hopeful of meeting the revenue targets for the current fiscal year. “Despite reduction in imports tax that used to be the major sources of the government revenue, the government has received success in revenue collection by a notable amount,” said Dhungana. “It shows that efficiency of tax authority has been improved in the recent days.”

The revenue collection over first six months stood at mere 39% of the targeted tax revenue of more than Rs 1.1 trillion for this fiscal year. The shortfall in revenue collection comes as a setback to the government at a time when it is struggling to manage funds for increased expenditure with the implementation of federal system. 

Dhungana informed that the government has identified alternative mechanism of revenue collection such as market monitoring, strict follow up of taxable areas along with effective mobilization of revised institutional structures, among others. “We will immediately bring into effect the alternative tools and deploy tax officials at the alternative sources as part of our efforts to meet revenue targets of this year,” he added.

Meanwhile, the government spending on infrastructure projects stood at mere 13.7% of the allocated expenses in the segment during the first half of the fiscal year, compared to 17.7% in the same period last year.

Dhungana defended it by saying that the capital expenditure in the review period does not post dismal picture. “It is a usual phenomenon. Major capital expenditure takes place in the second half of the fiscal year,” added Dhungana. 

According to him, the back-loaded money of the awarded contracts is the major cause for low capital expenditure in the first half. “As contracts of majority of the projects are either awarded or almost at the final stage of getting contracted, the expenditure pace will grow in the second half,” Dhungana said. 

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