Kathmandu, May 29
Nepal’s Finance Minister Yubaraj Khatiwada presented the KP Oli government’s fiscal budget before Parliament on Tuesday. Khatiwada, who is seen as a technocrat rather than a politician, had hinted since his first day in office that he was in favour of tightening the grip on the market, enforcing fiscal discipline and regulating the unregulated sectors of the economy. The same policies have been reflected in the budget along with Prime Minister KP Oli’s ‘dream projects’ that according to him will boost the economy and help Nepal graduate from the LDC status soon.
Here are we present to you the FY 2018/19 budget in 6 important announcements the Finance Minister made in his all-important speech:
1.Creating of 500,000 new jobs
Finance Minister Khatiwada says the government aims to generate 500,000 new jobs in the upcoming fiscal. Although the figure sounds pretty big, it is simply not enough in the context of Nepal where thousands of young people leave the country every day in search of jobs.
2. Achieving 8 per cent economic growth
The government says it wants to achieve 8 per cent economic growth in the next fiscal. The figure is higher than the growth Nepal achieved in the aftermath of the quake and the blockade, which had severely affected growth. During the current fiscal year, the economy is expected to grow by around 5 per cent. The government last year had said growth would hover around 7.2 per cent.
3. Govt hikes taxes on gas guzzling bikes, cars
The government has hiked taxes on bikes that have engines bigger than 150 cc and cars 2,000 cc. The government says that these vehicles are ‘luxury’ items and only drain the country’s foreign reserve.
4. Changes in income tax regime
According to Finance Minister Khatiwada, there shall now be five income tax slabs in Nepal. A taxpayer earning less than Rs 350,000 per year shall only pay 1 per cent tax while anyone who earns above Rs 35,000 and below 450,000 will have to pay 10 per cent tax. Previously, the rate for the Rs 350,000-450,000 was 15 per cent. Similarly, people earning Rs 600,000 to 200,000,000 will have to pay 30 per cent tax on their taxable income.
5. Additional tax on cigarettes
Finance Minister Khatiwada announced that the government will impose an extra Rs 0.25 on every stick of cigarette sold in the country as health risk tax. This is likely to push the price of cigarettes in the country.
6. Govt allocates funds to provinces
The government has allocated funds to the provinces for the first time. Three different funds have been used to provide financial resources to the provinces in the form of grants, conditional grants and project finance.
In addition to that, the government has set aside money for various hi-profile projects such as the East-west railway line, cable car and monorail projects in Kathmandu and new airports around the country. However, the finance minister has not made public how much money he has allocated for each project.
