KATHMANDU: In a candid admission, Finance Minister Dr. Prakash Saran Mahat disclosed today that the government has fallen short of its revenue target for the current fiscal year. Speaking at an event in Kathmandu commemorating International Customs Day, Minister Mahat highlighted the increasing pressure faced by the government in terms of revenue generation.
“While there has been a slight increase, we have not achieved the target we had set,” Dr. Mahat admitted during the address, indicating a significant challenge in meeting the fiscal goals.
The Finance Minister delved into the underlying reasons behind the revenue deficit, emphasizing the necessity for a shift to technology-friendly practices by the Inland Revenue Department and the Department of Customs. He argued that not all businesses could be efficiently managed without transitioning into an online system.
A major factor contributing to the revenue shortfall, as outlined by Dr. Mahat, is the changing landscape of vehicle imports. He noted a surge in the import of electric vehicles at the expense of traditional fuel-driven vehicles, causing a notable impact on customs revenue.
“We used to import vehicles in Nepal based on fuel, using petrol and diesel. However, in recent times, the import of electric vehicles has doubled compared to gasoline-based vehicles. Because of the lower duty rates on electric vehicles, there is a shortfall of Rs 34/35 billion in customs revenue in the latest figures,” explained Dr. Mahat.
The Finance Minister clarified that the government’s revenue growth estimates were significantly affected by the evolving preferences in vehicle imports, coupled with the promotion of electric vehicles.
The lower customs duties on electric vehicles compared to their traditional counterparts have led to a substantial deficit in customs revenue, making it more challenging to achieve the initially set revenue target.
As the government grapples with this unexpected revenue challenge, Dr. Prakash Saran Mahat hinted at the necessity for strategic adjustments in fiscal policies and the adoption of technology-driven solutions to adapt to the changing economic landscape.