Revenue Increases by 17 Percent, Yet Government Misses Target

The government’s revenue collection for the first four months of the fiscal year 2081/82 increased by 16.85% compared to the same period last year, reaching NPR 323.24 billion. Despite this growth, the revenue collection still fell short of the target of NPR 406.37 billion, achieving only 80% of the goal.

Historical Trends Highlight Challenges

Over the past five fiscal years, the government has consistently struggled to meet revenue targets, achieving less than 75% of the goal in several instances. Notably:

• 2076/77: Revenue target was NPR 1.112 trillion, with only 71.38% achieved.

• 2079/80: The government aimed for NPR 1.403 trillion but reached just 68.23%. This indicates a recurring issue of overambitious projections versus actual realizations.

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Current Fiscal Year’s Outlook

The revenue target for FY 2081/82 is set at NPR 1.419 trillion, marking a 34% increase over the actual collection from the previous year. While optimistic, this growth expectation might be challenging to achieve, considering the government’s historical performance.

Key Factors Hindering Progress

1. Systemic Challenges: Inefficient tax administration and loopholes in the tax system continue to impede progress.

2. Economic Constraints: Slower economic growth post-COVID and reduced business activities have limited tax revenues.

3. Compliance Issues: Gaps in tax compliance and reliance on narrow tax bases create revenue leakages.

Government’s Strategy Moving Forward

Deputy Prime Minister and Finance Minister Bishnu Prasad Paudel emphasized the need for structural improvements, including:

• Expanding the tax base.

• Enhancing tax administration efficiency.

• Addressing challenges in customs operations.

Finance Secretary Dr. Ram Prasad Ghimire echoed the sentiment, urging greater coordination and effort among stakeholders to meet revenue goals. Officials from the Customs and Internal Revenue Departments have also pledged to address existing challenges proactively.

Interpretation

The increase in revenue collection is a positive sign, indicating improved efficiency and a recovering economy. However, falling short of targets raises concerns about overly ambitious planning and the need for better execution. Achieving the annual revenue goal will require significant improvements in tax compliance, inter-departmental coordination, and addressing systemic inefficiencies. Without these reforms, the gap between targets and achievements may persist, putting fiscal stability at risk.

The government’s focus on structural reforms and anti-evasion measures could help bridge this gap, but success will depend on timely implementation and effective enforcement.