High time we saved the country’s economy

Economic growth is not the main concern


High time we saved the country’s economy

KATHMANDU: One has to be accountable to the people while passing the budget from the parliament. A comprehensive assessment should be carried out to find out whether the objective of manipulating, taxing, reducing, and amending the tax rate has been achieved.

Now there has come a 781-page-long Finance Act. We have said that value-added tax should be made the main basis of revenue mobilization. We collect 29 percent of the revenue from it.

After 1995, the amendment was included in the Financial Act. I have read the financial act since 1959. That is why the technical issue came up in 2001, now it has been amended many times. Therefore, there should be a lot of debate on this issue in the Parliament, attention should be drawn.

There are three reasons to review the tax. One is, where has the world market tax gone? The tax evasion is 427 million annually. This is equal to our budget for 45 years; in other words, this means paying 50 percent tax.

Next, the rich have to pay 2 percent in capital gains tax. On the other hand, the average person in the world has to pay 30 to 35 percent of the remittance tax. This is unfair.

The taxes, the justice it does, and the political impacts it brings are also included in my book ‘Roadmap to Modern Taxation’. There are 21 different taxes. If we include the ones like fee, they become 31-32.

By removing the deviation in remittance, that remittance had to come according to our capacity. The budget could not give the basic program that will bring those things.

Here are multiple taxes. Now, the third thing is that in the case of value-added tax, the Ministry of Finance has, in haste, manipulated everything into excise duty on arms. Parliament should take care of it.

Either we have to say we have changed the policy, otherwise, we have agreed on four things in 1999. There are three main things, one thing we promised to reduce the price, saying it is too much. We had told them we would re-manage the face hold. We had also said that income exemption would be granted only by increasing the tax range.

There are currently two rates of value-added tax in 28 countries of the world. The same 13 percent tax is levied on safari cars and on the children’s clothes, from social justice perspective it has become a regressive tax.

The scope of tax is not right. Now we have to study whether the lower tax should be 5 or 7 percent. The upper tax had to go from 15 to even higher. Sadly, the tax is done upside down for an event here.

The other is given to the specific area. Another is the overall tax reform. It’s time to review. Therefore, when the overall tax is reformed, if we add two rates of value-added tax, we can touch the threshold.

We can reduce the tax deduction rate. In Nepal, we have to add 25 percent to the evolution rate issued by the Nepal Rastra Bank. If 8 percent is taken out, it becomes 3 percent.

The Finance Minister said that Rs 1.5 trillion could be spent in the current budget. 163 revenue distributed also falls within that. The value-added tax and excise duty go down to Rs 143 billion.

In 2021/22, it has been 965. At present, the increase is 43 percent. The immediate growth of 21-23 percent is not possible. If we look at our revenue growth, the average growth was 20 percent 10 years five years ago. However, it has declined in recent years. Now, if the grant comes to more than 5.5 trillion, 24-25 percent can come. In the current trend, more than 40 percent of the loan has not come since then.

40 percent is not even 100 out of the current 243. If you take an internal loan, it collapses. The 8 percent growth rate is not possible. Looking at the data for the last 11 years, the average growth rate is 4.1 percent.

The interest rate is 6.2 percent, so we are reducing our assets every year. In that case, the budget would not do much. One should have looked at the international background while formulating the current budget.

The World Bank shared that we can’t stop the recession. The Bank of England warned the government there will be a food crisis in Britain. The Finance Minister there said 1.3 million people will go below the poverty line.

The United States has an average inflation rate of 8.3 percent. As mentioned in the April report, the inflation rate in food is 22 percent, and the fuel is 30 percent. In African countries, fuel consumption has risen to more than 60 percent.

In European countries, it has reached 22 to 23 percent. We, Nepalis have been dependent since 2008. Therefore, this budget does not seem to be able to protect Nepalis from the impact of price hikes.

Within the structure, it is better to look at the priorities of the country after talking about the objectives of this budget.

The second problem now is the lack of investable capital. We attract foreign investment. That’s it. Foreign investment and foreign aid were to come.

By removing the deviation in remittance, that remittance had to come according to our capacity. The budget could not give the basic program that will bring those things.

The third is the problem of foreign exchange reserves. That too did not seem to solve the problem.

The fourth problem is to invest in the agricultural sector to growth rate. So that was not possible. For irrigation, agriculture and fish, this time it is 130. Looking at the total budget, it is 6.3 percent.

Therefore, no matter what is written in the language, we have to go for resource management. Despite the claims to arrange it, there is no manpower. We don’t have enough technology. What the current world crisis has shown is it is dangerous to depend on something from outside.

This is because everyone in the world has experienced sanctions and counter-sanctions. Therefore, it is time to think fundamentally and save the economy now, not the time to achieve economic growth.

Within the structure, it is better to look at the priorities of the country after talking about the objectives of this budget.

The constitution says not to have too many funds. It took five years to adjust it. Every budget speech has it as well, yet we are working to create more funds.