Govt revenue collection falls short of target
KATHMANDU, Jan 31: The government’s revenue mobilisation fell short of target in the first half of the current fiscal year, as drop in import growth led to lower collection of customs duty and value added tax (VAT).
Data provided by the Ministry of Finance (MoF) show that Rs 163.44 billion was raised in revenue in the six-month period to mid-January, as against the target of Rs 168.18 billion. However, revenue generated in the first half was 21.46 per cent higher than that collected in the same period last fiscal.
Failure to meet the revenue target affects the government’s expenditure plan, as it formulates its annual budget based on income that is likely to be generated from various revenue sources throughout the year.
“It is true that we failed to meet the six-month target. But we are confident in making up the losses by the end of the seventh month of the current fiscal,” MoF joint secretary Rajan Khanal said.
One of the reasons for the failure to meet revenue mobilisation target was lower collection of VAT, which makes the largest contribution to the government’s income.
The government was able to generate Rs 47.98 billion from VAT in the first six months of the current fiscal, as against the target of Rs 51.13 billion. VAT collection did not meet the target due to lower import growth this fiscal.
Data provided by the Department of Customs show imports rising by a mere three per cent to around Rs 350 billion in the first six months of the current fiscal due to weaken-ing of Nepali rupee. Considering inflation at around 10 per cent, it could be said that imports actually declined in real terms in the first half.
Lower import growth, in turn, hit the government’s total VAT collection, as 65 per cent of value added tax is collected from goods brought in from foreign countries.
The DoC data show the government generating revenue of Rs 29.15 billion from customs duty slapped on imported goods in the six-month period, as against the target of Rs 31.07 billion. This affected total customs duty collection in the review period, which stood at Rs 32.49 billion in the first half, as against the target of Rs 32.56 billion.
Despite this discouraging trend, the end result was not that disastrous for the government, as higher collection of income tax and excise duties cushioned some losses.
The government collected Rs 34.26 billion in income tax in the first half of this fiscal — higher than the target of Rs 33.58 billion set for the period. Excise duty collection also beat the target, with the government raising Rs 21.41 billion, which was Rs 230 million more than projected by the government.
Among others, non-tax revenue of the government stood at Rs 20.70 billion in the six-month period, as against the target of Rs 19.15 billion, while another Rs 520 million was generated from health and education service taxes. Taxes raised from other sources, like vehicle and land registration fee, and the Office of the Company Registrar, meanwhile, stood at Rs 6.08 billion, as against the target of Rs 9.48 billion.
(Source: THT)
