Strike hits revenue collection

KATHMANDU, May 6:  The ongoing strike called by the UCPN (Maoist) has severely hit revenue collections of the government, exposing it to a situation whereby it could miss the collections target set for the 10th month of the current fiscal year.



The strike has brought overseas trade to a grinding halt and thus, affecting collections of customs. Likewise, closure of markets, manufacturing and services too has hurt collections of value added tax (VAT) and excise duty. It would impact income tax collections as well.[break]



Revenue Secretary Krishna Hari Baskota said that collections from customs over the last four days have remained almost zero and collections from VAT and excise too are very negligible. "This will hurt revenue growth rate," he said. He, however, did not divulge on the extent by which the collections could be hit.



The government has set a target to collect around Rs 15 billion in revenue this month (mid-April to mid-May). To realize it, the government needs to collect revenue at a growth rate of 24 percent. Till May 30, the collection had grown at a sound growth of 28 percent. But it has dropped sharply from May 1.



"So far we have managed to collect around Rs 4 billion, which stands just above half of the target set for the month," said Nava Raj Bhandari, director general of Customs Department.



The department collects around Rs 300 million in revenue a day from different customs offices on normal circumstances. But the collection has remained almost zero for the last four days.



Officials said the four days of strike has already created a shortfall in collections by over Rs 1.20 billion. "This gap is too high to be bridged," said the source.



Worse is; the volume of revenue loss could continue to mount as political parties have not managed to end the ongoing deadlock.



Inland Revenue Department (IRD) officials too expressed similar apprehension on VAT, excise and income tax collections. Because of low compliance and less than targeted spending of development budget, the department was already facing a tough time to match collections with the target.



"Soaring imports had largely given momentum to the VAT collection rate. But with customs and markets remaining closed, we will most likely fail to collect enough this month," said an IRD official.



The government has set a target to collect Rs 176.50 billion in revenue in the current fiscal year. By the end of first nine months, it has mobilized Rs 126.53 billion, posting a growth of 28.2 percent over collections recorded in the same period last year.

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