Kathmandu. Finance Minister Dr. Swarnim Wagle said that the new tax policy and provisions of the budget adopted by the government are focused on the long-term economic welfare of the country and the formalization of the economy. Finance Minister Wagle said this while responding to the questions raised by lawmakers during the discussion on the Appropriation Bill, 2083 in the National Assembly on Monday.

Stating that the State has been providing tax exemption and financial incentives worth billions of rupees to the energy sector since the past one and a half decades, the Finance Minister said the private sector’s share in electricity production has reached 80 per cent. According to him, the installed capacity is projected to reach 5,200 MW by the end of this fiscal year, which was 262 MW at the end of the Panchayat period. 

He clarified that although 5 percent VAT has been proposed to bring the electricity sector under the tax net, up to 50 units will be provided free of cost and the price adjustment will be implemented from July 17 without additional financial burden on the general consumers.“The effective rate will be only 3 to 4 percent. The government is ready to increase the limit of 50 units to 100 or 150 units if it seems to be inconvenience to the consumers. “, he said.

Responding to the question raised on the issue of changing the tax rates, Minister Wagle said For the first time since 2048 BS, major structural reforms have been made in income tax, VAT , customs and excise duty. According to him, the anomaly in the customs rate of raw materials and finished goods has been corrected to encourage domestic industries. He also clarified that some technical errors in the budget before the budget speech have been duly corrected and no unauthorized changes have been made in the Finance Bill.

Finance Minister Wagle has termed the education service charge levied on private schools as ‘progressive tax’ .According to him, the government plans to spend the money collectedfrom the fee-paying class in private schools for the improvement of public education. He said that the limit of income tax has been increased from Rs 5 lakh to Rs 10 lakh to provide relief to the middle class and the facility of deduction of tax has been given on the expenses of private schools.

Stating that the equalization grant to the provinces and local levels has been increased, he said the financial transfer would be made as per the target of revenue collection.He also stressed the need of increasing the state’s spending capacity while acknowledging that the capital expenditure situation was weak at present. He also said that the Finance Ministry has been given additional authority and responsibility for the implementation of the budget by curtailing the powers of the Ministry of Finance. 

Finance Minister Wagle has said that the incumbent government has initiated big reforms that a weak government cannot afford, and urged the lawmakers to understand it constructively.