After the budget for the upcoming fiscal year was made public on 15th Jestha, lawmakers have raised questions about the Ministry of Finance repeatedly changing tax rates through the economic bill. Opposition lawmakers have demanded a parliamentary investigation into Finance Minister Swarnim Wagle, alleging that he leaked tax rates to benefit certain businessmen before the budget was presented in the federal parliament meeting on Monday and repeatedly changed the economic bill. 

They say that only the Finance Minister will know about the change in tax rates. The lawmakers have demanded the formation of a parliamentary committee to investigate the matter, saying that he helped businessmen import electric vehicles from various companies by leaking information before the budget.  RPP parliamentary party leader Gyan Bahadur Shahi has demanded that a parliamentary committee be formed to investigate the Finance Minister. 

‘Should the government be accountable to the parliament or not? The economic bill has come, it is the property of the parliament. If the Finance Minister changes that property of the parliament without presenting it in the parliament, whose interest is it?’ Shahi said, ‘No one except the Finance Minister and the people approved by the Finance Minister know the tax rates. But today, due to a leak of information, 753 vehicles enter the Korala border, customs are cleared on the 14th, and the vehicles arrive on the 20th. And what is this if not a conflict of interest? Who did this leak?’ 

Questioning the government, he demanded the formation of a parliamentary investigation committee to investigate the Finance Minister. ‘No one except the Finance Minister knows when the tax rates are changed and what the rates are,’ Shahi said. ‘There is a legal system in Nepal that treason cases will be filed if such a crime is committed. The Finance Minister should answer in Parliament on the basis of who did it today.’ Shahi said that the Parliament should investigate the tax rate changes, not the government itself.

UML Parliamentary Party Deputy Leader Padma Aryal questioned the government on the issue of the earlier leak of information on the tax rate changes. ‘The pages of the financial bill presented in Parliament were changed. 16 pages disappeared. There is a discussion in the market today. Similarly, the tax rates were changed. The BYD car scam in China is rampant all over the road in the same way. By arranging customs and paperwork, the car does not arrive overnight, and that kind of scam has become a game,' Aryal said, 'It is about the BYD car case, it is not just a suspicion, there is a clear indication that a scam has taken place there. We can say it outright. Therefore, in the situation today, when a bill presented in Parliament is given one number in Parliament, the ministry returns and gives another number, what is the purpose of this behavior? For what purpose is such work done? There is no minister here, for whose benefit, for what purpose is such work done by changing numbers through the Speaker?'

Aryal also asked which minister will answer the question in Parliament about the change in tax rates. 'Who will answer this? Will the Agriculture Minister answer this, will the Health Minister answer this, will the Infrastructure Development Minister answer this, will the Finance Minister himself answer this? It is a crime to cheat the state by evading taxes overnight. It is a crime to cheat the state. Tax rates have been manipulated and increased a lot, making people's lives difficult,' she said. 

NCP MP Gopal Sharma said that the minister cannot make arbitrary amendments to the bill that has reached the parliament. He demands an answer as the government has leaked the tax rates to benefit certain businessmen. 'On 15 Jestha, the budget for 2083/84, along with the economic bill, was tabled among the dependent bills. There is a difference between the economic bill currently tabled in the parliament and the economic bill placed on the official website of the Ministry of Finance,' MP Sharma said, 'The government cannot manipulate the bill that is tabled in the parliament and is under discussion by deceiving the parliament. Such arbitrary action by deceiving the parliament is unacceptable to us. On the eve of the budget, a businessperson has been benefited by leaking tax rates and the state has suffered a loss of billions.’

RPP parliamentary party leader Shahi raised further questions, saying that the minister is preparing to change tax rates but blame the employees. ‘A parliamentary committee is needed to investigate the country’s Finance Minister, not the Finance Ministry. Because this is not a normal thing, how did the information about changing the country’s tax rates come out today by leaking? And is it something that customs employees know? Who knows?’ Shahi said, ‘How did the information leak? This is a big crime and this is a government formed under the guise of good governance. This government has 182 seats, you did not come after doing any work, you came because the people were fed up with good governance, now do not take the path of misgovernance.’

The financial bill uploaded by the government on the Finance Ministry’s website on 15 Jestha was removed from there the next day. It was put up again 2/4 hours later, in which some changes have been made in tax rates and arrangements. The current financial bill on the website of the Ministry of Finance is the third amendment.

The financial bill, which was presented in Parliament after Finance Minister Swarnim Wagle presented the budget for the upcoming fiscal year, has been amended four times so far. In each change, some tax rates have been reduced and some have been increased. Some have been given relief while others have been imposed heavy taxes. Since the day the budget was made public, lawmakers have also viewed this arbitrary change in tax rates as a matter of concern and suspicion.

The main differences between the financial bill, which was first uploaded on the website of the Ministry of Finance on 15 Jestha and the one currently there, are as follows: First, the government had amended the Value Added Tax (VAT) Act and initially exempted electricity consumption of up to 50 units per consumer for household purposes from VAT. This provision was mentioned in the VAT Act. In which, a provision was made that ‘electricity up to 50 units per consumer consumed for domestic purposes’ would not be subject to VAT, but it would be levied on anything in excess of that. According to this provision, VAT would be levied on sales from businesses trading electricity to businesses trading electricity (for example, when electricity promoters sell to Nepal Electricity Authority).  The financial bill, which was first uploaded on the website of the Ministry of Finance on 15 Jestha and is currently there, has been amended four times.

Currently, the provision has been amended to exempt electricity traders and households from VAT for up to 50 units. ‘Electricity sold from businesses trading electricity to businesses trading electricity and electricity up to 50 units per consumer consumed for domestic purposes’ is stated in the latest revised economic bill. The latest amendment states that VAT will not be levied on businesses trading electricity but VAT will be levied on electricity consumed in excess of 50 units per consumer per month. 

Second, according to the provisions of the latest bill, the government has reduced the road construction fee for electric vehicles worth less than 2 million to 2.5 percent. Generally, the road construction fee was levied at the rate of five percent on all types of vehicles. The same provision was continued in the first bill made public on 15 Jestha. However, the provision has been amended in the latest bill. 

‘Notwithstanding anything written in Chapter 1, a 2.5 percent road construction fee shall be levied on motor vehicles falling under subheadings 8703.80.91 and 8703.80.99 with a customs value of up to two million rupees at the time of import,’ the latest economic bill states. 

Third, the government has also amended the economic bill in the provision related to fuel customs duty and green tax exemption. In which, initially, the import of petrol and diesel was 10 percent per liter. By amending it, the government has said, ‘Notwithstanding anything written elsewhere in this Act, a green tax of Rs. 10 per liter shall be levied on the import of petrol and diesel. In this provision, it seems that the percentage has been corrected instead of the rupee. 

Fourth, the government has added 3 (b) to Section 11 of the Income Tax Act in the Finance Bill to provide tax exemption for 10 years to movie theaters established in areas other than metropolitan cities and sub-metropolitan cities. Finance Minister Wagle had mentioned this in his budget statement. He had said that a provision has been made to provide complete income tax exemption for the first 10 years to those establishing new movie theaters in areas other than metropolitan cities and sub-metropolitan cities. But this issue was not included in the initial Finance Bill. In the latest Bill, a provision has been added to Section 5 of Sub-Section 11, Clause (b), by adding 3 (b) to the clause ‘movie theaters established in areas other than metropolitan cities and sub-metropolitan cities shall be tax exempt for 10 years from the date of commencement of commercial business’. 

Fifth, Section 11 of the Income Tax Act has been amended to read as follows: ‘Notwithstanding anything contained elsewhere in this section, if a natural person has insured a private building owned by him with a resident insurance company, the annual premium paid for such insurance or ten thousand rupees, whichever is less, shall be deducted from the taxable income and the tax shall be calculated as per this section only on the remaining amount. This provision was also in the budget statement. But it was not in the Finance Act. It has been included through an amendment.

Sixth, by amending the bill, the government has made a provision to allow a person to deduct 25 percent of the annual amount paid to a resident person for the education of his children as tuition fees or 25 thousand rupees, whichever is less, from taxable income. ‘Notwithstanding anything contained elsewhere in Section 16 (b) of the Act, the tax shall be calculated on the remaining amount after deducting 25 percent of the annual amount paid by a resident natural person towards tuition fees for the education of his/her children, or 25 thousand rupees, whichever is less, from the taxable income,’ the latest bill states. This provision was not present in the original bill. When Kantipur inquired about the amendment to the Finance Bill and why the tax rates had to be changed, Finance Minister Swarnim Wagle admitted last week that the Finance Bill had been amended after minor errors were found in percentages, rupees and other details.
When Kantipur inquired about the amendment of the Finance Bill and why the tax rates had to be changed, Finance Minister Swarnim Wagle admitted last week that the Finance Bill had been amended after minor errors including percentages and rupees were found. ‘2/3 errors were found, where the percentage should have been rupees. Such minor errors have occurred. The Parliament has been informed of this,’ he said, ‘In previous years, up to 40 changes were made. The employees worked until 4 am, which was a common mistake.'

Finance Minister Wagle said that the government had reduced the road construction fee for vehicles worth less than 2 million rupees with the aim of preventing the price of small-value vehicles from increasing, and initially omitted it from being included in the economic bill due to an error. 'When I was drafting the economic bill, I had mentioned the note and decided to impose half the road construction fee of 5 percent on vehicles worth less than 2 million rupees. But when the bill was finally reviewed by the Law Ministry, the note was missed. Now only that has been included,' he said.