Print Edition - 2015-06-08 | MONEY
Govt revises down revenue forecast
Jun 7, 2015-
The government has projected disappointing revenue collection for the next fiscal year as various sectors of the economy, particularly the services sector, have been hit hard by the recent earthquakes.
The Finance Ministry has projected a revenue collection of Rs460-480 billion for the next fiscal year, against previous projection of more than Rs500 billion.
Based on the ministry’s estimate, the Resource Committee headed by the National Planning Commission had given a revenue collection ceiling of Rs512 billion for the next fiscal year before the earthquake hit the country.
The Resource Committee plans to fix the budget ceiling in Monday’s meeting.
Based on the estimates of economic growth, tax base, trend of revenue collection over the last 4-5 years and administrative efficiency of the government, the Finance Ministry projects the revenue target.
According to ministry officials, revenue collection from the services sector is expected to dive next fiscal year as areas like tourism, banking and insurance sector have been hit hard.
“We do not have much space to increase the tax base,” said a Finance Ministry official. “We expect slow growth in the manufacturing sector and fall in the import of vehicles.”
With the earthquake slowing down economic activities, there has been massive fall in revenue this fiscal year too.
Against the target of Rs422 billion this year, the Finance Ministry revised the projection at Rs380-Rs390 billion. Over the last few years, there has been a massive surge in revenue collection against the gross domestic product.
The government missed revenue collection target by Rs16.38 billion as of mid-May this fiscal, the Finance Ministry said Tuesday. The government had planned to collect Rs329.31 billion during the review period, but earnings reached only Rs312.93 billion.
Of the total collection as of mid-May, the contribution of VAT stood at 28.91 percent followed by income tax 21.09 percent, customs duty 19.57 percent, excise duty 13.09 percent and non-tax 9.7 percent.
The Department of Customs (DoC) and the Inland Revenue Department (IRD) are the key government offices engaged in collecting revenue.
As imports have come down, the collection of revenue from customs offices has also dropped. According to the DoC, it missed the revenue target by Rs5 billion as of the 10th month.
Published: 08-06-2015 07:36