The budget unveiled on May 29 by Finance Minister Yubaraj Khatiwada has a dual focus: expanding revenue base and creating jobs. The goal is apparently to make positive changes in the lives of low-income folks by taxing high- and middle-income individuals.

 

In a society with a huge informal economy, the budget tries to convey another message too: stop over-consumption. The hike in excise duties on motorbikes and cars hints at it. The auto sector is but one example; the budget has caused many other entrepreneurs to lose sleep. The private sector in general will bear the brunt of the changes in taxation. In a review session on May 30, a day after the budget, Khatiwada said, “Businesses have to pay their due to the state.” Lest someone missed the message, he added that tax evasion will be strictly punished.

 

Economist Madan Kumar Dahal thinks at least some proposed measures are unrealistic. For instance, the 8 percent growth target will be difficult to achieve without more capital expenditure. The government will have to spend much more than its target capital spending (23.9 percent of total allocation).

 

Predictably, Nepali Congress came down heavily on the budget. “In the election campaign trail, the parties heading this government claimed that the NC’s economic policies were flawed. But this budget is a strange hodgepodge of NC’s policies and communist orthodoxies,” NC central working committee concluded a day after the budget’s announcement.

 

It is safe to assume that we have not heard the last of the argy-bargy over the 2018-19 budget.

 

By Shreedhar Khanal

 

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