‘Tax exemption should be in favour of consumers’

Kathmandu, July 1

Experts have expressed concerned over whether the tax discounts given to the businesses and industries have reached the consumers.

If consumers do not benefit from such discounts, they should be scrapped, they said at a dialogue organised by Nepal Association of Financial Journalists (NAFJI) on Friday.

“The government should analyse if the tax discount resulted in more employment, environment protection, productivity and economic growth,” said Sujata Pariyar, a member of the Industry, Commerce, Labor and Consumer Welfare Committee of the House of Representatives.

She said that the committee had directed the government to replace the discriminatory tax policies so that it could help address the maladies of the business community and make positive impact on the economic growth of the country.

CPN-UML Chief Whip Bishal Bhattarai said that the revenue policy should be changed keeping in view the interest of the consumers and protection of domestic industries.

He said that the government should save itself from feeding handful businessmen formulating a policy only in favour of them. “The business community should also give priority to the local production and national interest,” he said.

Nepali Congress lawmaker Divya Mani Rajbhandari said that consumers would face problems in the future if the entrepreneurs were affected today. He suggested the lawmakers and the businesspersons to refrain from the ‘conflict of interest’ in order to save the integrity of both the professions.

Chairperson of the Consumer Interest Protection Forum Jyoti Baniya said that the country's policy has failed in revenue strategy. However, he said that the industrialists are mainly responsible for this. "It was the industrialists who ruined the system when it came to developing the system," he said.

Member of the National Revenue Advisory Board Lekh Nath Sharma Pangeni said that the board would try to include the demands and compliants of the business sector.

However, according to him, the NRAB had suggested the government to conduct group audit of the large business houses and impose digital service tax as well. He suggested learning from India and France while developing a policy to force digital companies like Facebook and others to pay tax locally in Nepal.

Likewise, Economist and tax expert Dr. Chandra Mani Adhikari said that Nepal's tax policy has witnessed frequent changes.

He said that it would not ensure investment, and added that it was time to adjust the tax policy that would not change from government to government.

“For whom should the state make policy? When the state formulates the policy, it has to take care of who is affected. Interest of the consumer should be taken into account,” said Dr. Adhikari.

He also questioned whether the tax exemption for the businesses would reach the consumers.

Speaking at the programme, industrialists of various sectors said that they were affected as the government has decreased the customs duty of the finished goods while domestic products are paying high taxes. “It has created adverse situation for us,” said Dolaraj Adhikari, President of Sanitary Pad Manufacturers’ Association.

“Domestic industry has reached the point of closure due to the tax policy of the coming year. The government has given 90 per cent discount on imported goods but domestic industries are paying 8.5 per cent tax on raw materials imports,” he said.

Former President of the Federation of Nepalese Chambers of Commerce and Industry Pradip Shrestha said that the policy adopted by the government through last year's replacement budget has not benefited the consumers. He said the government's policy against the billet industry had resulted in a Rs. 8 billion drop in revenue and no fall in the price of iron bars.

Kiran Shakh, an industrialist, said that 20 industries were in crisis due to the government's policy of protecting the industries that make billet from sponge iron. According to him, most of the companies are in the verge of collapse.

He said that the government has adopted a policy of taxing seeds, chemical fertilisers, food grains, vegetables and medicinal products imported to Nepal. 

  Published in The Rising Nepal daily on 2 July 2022.