The private sector of the country has criticisedthe federal budget 2018-19 and termed it a ‘bureaucratic budget’ as it will notbe able to address the key constraints of the economy.

Federation of Nepalese Chambers of Commerce and Industry(FNCCI) — the largest private sector umbrella body — has said that the budgethas only partially addressed the problems of the agriculture and tourismsectors and largely ignored the industrial and manufacturing sectors.

“Though the budget is supposed to be a political document,we found the federal budget ‘bureaucratic’,” said Umesh Lal Shrestha,vice-president of FNCCI.

“The country needs to attract investment in every sector,as growth in all the sectors is static due to lack of fresh investment, but thefederal budget has imposed additional taxes even on those sectors that hadstarted performing relatively well in the recent years.”

Citing that the cost of production is already high in thecountry, Shrestha said that the rise in tax rate will also discourage investmentin the economy.

The Confederation of Nepalese Industries (CNI) has saidthat the budget has favoured the cooperatives sector and adopted a policy tocollect more taxes from the industrial and commercial sectors.

“Industries struggling to survive will be hit hard as thetax rate is high,” as per industrialists. Ultimately, industries will pass onthe increased cost of production to the consumers, except in those sectors likehydropower that cannot top off the cost to consumers.

ShailendraGuragain, president of Independent PowerProducers’ Association – Nepal (IPPAN), said that the budget has not addressedthe challenges faced by the domestic power producers. “Most importantly, thegovernment has deviated from the earlier policy of extending value added tax (VAT)rebate to developers for Rs five million per megawatt for generation projects.

As per Guragain, no substantial facility has been offeredto domestic hydropower developers, while foreign investors have been provided araft of facilities.

“The federal budget has raised the tax on telecommunicationservice providers and internet service providers in contradiction to thegovernment’s policy of increasing access of internet to all,” one internetservice provider (ISP) told The Himalayan Times on conditionof anonymity.

Likewise, the capital gains tax (CGT) threshold, which wasRs five million some two decades back, has been brought down to Rs one millionon real estate trading, which is not pragmatic as the value of real estate hasincreased by multiple times over this period of time, as per realty traders.

The private sector umbrella bodies are preparing to bringout a common view on the federal budget after a few days.

Source:The Himalayan Times, 4^th June 2018