Government misses revenue collection target once again

The government missed revenue collection target by Rs 1.85 billion in the first nine months of the current fiscal year, largely due to deceleration in tax collection in the previous months.

The government had set revenue collection target of Rs 293.31 billion for the nine-month period between mid-July and mid-April. But it was able to raise Rs 291.46 billion during the period.

“We missed the target due to shortfall in tax collection in the previous months. But we have made some recovery in the ninth month of this fiscal,” Revenue Secretary Navraj Bhandari said.

In the ninth month of this fiscal — or during the period between mid-March and mid-April — the government mobilised Rs 50.19 billion in revenue, beating the target of Rs 47.82 billion set for the period.

“If we move ahead in this pace, we will be able to make full recovery by the end of the 10th month of this fiscal and easily achieve the annual revenue collection target (of Rs 422.90 billion),” Bhandari said.

Despite this optimism, latest data show that the government has been failing to meet collection targets of crucial taxes like value added tax (VAT), income tax and customs duty, which make significant contribution to the revenue.

Collection of VAT — which accounted for 28.56 per cent of the government’s total revenue — for instance, stood at Rs 83.37 billion in the first nine months of the current fiscal.

Although VAT collection during the review period was 14.95 per cent higher than in the same period last fiscal, it was below the target of Rs 87.44 billion. Also, the target of Rs 11.37 billion set for the ninth month of the fiscal was not met.

This was the same with income tax, which made a contribution of 21.72 per cent to the total revenue in the first nine months of the current fiscal.

Collection of this tax stood at Rs 63.40 billion in the first nine months of this fiscal, as against Rs 54.21 billion in the same period last fiscal. But the collection was below the target of Rs 64.98 billion set for the nine-month period.

Also, customs duties added Rs 56.38 billion to the state coffers in the first nine months — up 14.22 per cent than in the same period last fiscal but lower than the target of Rs 57.61 billion.

“We have not been able to collect some of the taxes in a desired manner because of deceleration in imports,” Bhandari said.

Import growth in the first eight months of the current fiscal, for instance, stood at 10.5 per cent as against 27 per cent in the same period last fiscal. Such deceleration affects revenue collection because majority of customs duties is collected from imports and a significant portion of VAT is also raised from goods brought into the country from India and abroad.

Import growth, on the other hand, is said to have fallen due to reduction in international prices of petroleum products, which caused oil import bill to shrink, and inability to ramp up capital spending.

The government’s capital spending stood at Rs 31.68 billion, or 27.14 per cent of the total capital budget of Rs 116.75 billion earmarked for this fiscal, in the first nine months of the current fiscal, show the latest statistics of the Financial Comptroller General Office.

Source: Himalayan Times