Per capita revenue increases despite sluggish economic performance

Kathmandu, June 10: The per capita revenue (PCR) collected by the government has witnessed a significant increment over the years. It is much higher than the country’s GDP (Gross Domestic Product) and per capita income (PCI) growth rate. 

The government statistics show that the per capita revenue almost doubled in five years, from Fiscal Year 2011/12 to 2015/16, it was Rs. 9,094 in FY 2011/12 and reached Rs. 16,952 five years later. 

Economic Survey 2073-74 mentioned that the PCR increased by 17.1 per cent in FY 2015/15 while the year witnessed almost zero GDP growth and PCI saw no significant improvement as compared to the previous years. 

Likewise, as per the Central Bureau of Statistics, a national statistical organization under the National Planning Commission (NPC), the PCI of Nepali citizen couldn’t cross 766 US dollars from 2011 to 2016.

The GDP – PCI was 702 dollars in 2011/12 and 746 dollars in 2015/16, though it reached 766 dollars in 2014/15. 

However, the government has estimated that the PCI would reach 862 dollar this fiscal.

Similarly, the GDP growth rate was below 5 per cent in those five years, except in 2013/14 when the country achieved 5.72 per cent growth. 

Revenue Secretary at the Ministry of Finance (MoF) Rajan Khanal said that the PCR was steadily increased due to the economic expansion. 

“The size of Nepal’s economy has increased significantly in the last decade which has resulted in better revenue collection and increased government income,” he said. 

He stated that the growth of bank and financial institutions and corporatisation of family businesses and other private enterprises also contributed to the revenue growth. 

Economist Dr. Dilli Raj Khanal said that the inflated income was due to the increased import trade as the higher imports contributed to higher revenue from VAT (Value Added Tax), customs tax and excise duty.

“However, the country had a track record of good revenue performance in the past years, and tax compliance has been improved. It has played a positive role in increasing the personal and business income. This is the reason the country sets ambitious revenue target every year and achieves it in the end,” he said. 

Secretary Khanal also said increased consumption of domestic and foreign goods and services as well as the increased purchasing capacity of consumers’ also contributed to PCR growth. 

Meanwhile, the per capita government expenditure has also been increased over the years.

According to the MoF data, per capita government expenditure was Rs. 21,139 in FY 2015/16, 11.5 per cent up from the previous year. 

Such expenditure was Rs. 18,959 in 2014/15, and Rs. 12,621 in 2011/12.

PCR, govt. revenue and GDP growth

Fiscal Year	PCR (Rs.)	Govt. Income (Rs. in millions)	GDP-PCI (in USD)	GDP Growth (%)
2015/16	16,952	421,097	746	0.01
2014/15	14,476	355,956	766	2.97
2013/14	12,900	312,441	725	5.72
2012/13	10,800	259,215	708	3.76
2011/12	9,094	240,000	702	4.61

Source: Ministry of Finance and Central Bureau of Statistics

(Published in The Rising Nepal Daily, 2017006-11)