With the government’s revenue insufficient even to meet the recurrent expenditure, the revenue administration and other government agencies have started to work aggressively to revive the faltering revenue collection as well as control the revenue leakages. After his appointment as the new Finance Minister Bishnu Poudel has already held two meetings with the top officials of the ministry, following which the Inland Revenue Department (IRD) has intensified market monitoring, and the Department of Revenue Investigation (DRI) has filed cases in court against revenue evaders.  On the other hand, the Department of Customs has intensified monitoring of low invoicing and customs evasion. These three key government agencies responsible for revenue administration have drawn an action plan to control revenue leakages.

On Wednesday, the Department of Customs (DoC) held a meeting with the representatives of the NADA Automobiles Association of Nepal urging them to clear thousands of imported four-wheelers that have remained parked at the yards of the various customs offices across the country.

“There are around 2,800 four wheelers including cars and passenger buses at the yards of customs offices. The clearance of these vehicles would help us to generate a significant amount in revenue,” said a senior DoC official. “That's why we invited the representatives of the NADA to tell them to convey a message to their members that these vehicles could not be parked at yards of customs offices indefinitely.” According to the official, these four-wheelers were imported in recent months based on the letters of credit (LCs) opened by the respective importers before the government restricted the import of vehicles in April last year. Amid depleting foreign exchange reserves due to massive imports that led to fears that the country could face the situation of Sri Lanka, the government imposed a ban on the import of different types of 'luxury' goods along with many other respective measures to control imports. But the move hit the government’s revenue hard and the country failed to make a significant improvement in the foreign exchange reserves. So, the government lifted the ban on imports starting from mid-December last year. But customs officials said that automobile importers have been refusing to take their vehicles by completing the customs clearance procedure. “They are demanding further concession such as the mandatory provision of maintaining a certain margin at the banks to open LCs to import vehicles,” said the official. For a long, the import of vehicles has been one of the biggest sources of revenue for the government as the customs duties and other taxes levied on vehicles are very high compared to other goods. The government's move to restrict imports of certain items including automobiles affected the customs revenue badly. According to the department, its target of revenue collection till mid-December in the current fiscal year 2022/23 was Rs 257 billion but it has been able to collect only Rs 157 billion, suggesting a massive hole in the revenue. Not only the customs revenue, the collection of island revenue is also lower than the target. According to the Inland Revenue Department (IRD), it has only collected Rs 150 billion as of mid-December of this fiscal year against the target of Rs 174.37 billion which accounts for nearly 87 percent of the target. “Slowing of economic activities is one of the reasons behind sluggish internal revenue collection,” said an IRD official. As a result, the government's revenue has not been enough even to meet the resources for the administrative expenditure of the government. According to the Financial Comptroller General Office (FCGO), total revenue collection as of January 3 stood at Rs 360 billion while recurrent expenditure (administrative expenditure) stood at Rs 406 billion. The government has suspected increased revenue leakages which may have contributed to dismal revenue collection. Last week, the Central Revenue Leakage Control Committee directed the bodies concerned to make maximum efforts to control revenue leakage. A meeting of the Committee held last Wednesday in the presence of Deputy Prime Minister and Finance Minister Bishnu Poudel and Deputy Prime Minister and Home Minister Rabi Lamichhane held a discussion regarding the present condition of revenue collection and controlling revenue leakage. According to the officials, Lamichhane had directed the administrations under the home ministry to actively work to control revenue leakage taking place in the checkpoints. The customs official said that based on the instruction of the Central Revenue Leakage Control Committee, the customs department has already issued orders in the name of the customs offices to coordinate with District level revenue league control committees headed by chief district officers to control revenue leakages.