Nepal’s Rs 300 billion revenue waivers over three years spark economic accountability debate

KATHMANDU: Nepal’s government has waived NPR 300 billion in revenue over the past three years, part of a decade-long total of NPR 662.4 billion, raising critical questions about its economic impact, according to economists and auditors. “What have Nepalis gained from NPR 300 billion in waivers? Has production cost decreased or output increased? The government keeps no record,” said economist Nar Bahadur Thapa. “This could have funded Budhigandaki or Nijgadh Airport, enabling transformative infrastructure.”

Data from the Office of the Auditor General shows that from fiscal year 2070/71 (2013/14) to 2080/81 (2023/24), the government waived NPR 662.4 billion, with annual figures of NPR 38.27 billion in 2070/71, NPR 49.01 billion in 2071/72, NPR 51.30 billion in 2072/73, NPR 59.20 billion in 2073/74, NPR 41.24 billion in 2074/75, NPR 44.21 billion in 2075/76, NPR 35.06 billion in 2076/77, NPR 42.89 billion in 2077/78, NPR 121.81 billion in 2078/79, NPR 99.42 billion in 2079/80, and NPR 79.87 billion in 2080/81. The Inland Revenue Department (IRD) confirmed the NPR 300 billion figure for the last three years.

Waivers primarily benefited businesses importing plastic granules, steel sheets, glassware, resin, glass bottles, iron angles, soybean mills, and prefabricated houses. Ministries, local governments, and public entities also granted exemptions. The Auditor General flagged irregularities, noting customs offices improperly waived duties for hydropower equipment like penstock pipes, deemed ineligible. Health institutions importing ventilators and dialysis machines received ministry-backed waivers, yet no audits verify if these reduce service costs.

Thapa criticized the government’s shift from subsidies to revenue waivers, calling it a “dangerous precedent” while citizens, including the poor, pay 13% taxes. “Revenue mobilization isn’t the issue; people are compliant. The government must address this seriously,” he said. Economist Dr. Govind Nepal likened waivers to public investments, demanding accountability. “What did the state gain? Did production or exports rise? Did consumers get cheaper goods? These need rigorous debate,” he said, advocating for agreements ensuring state benefits before granting waivers.

The Auditor General urged stricter oversight, recommending waivers only for projects with pre-approved master lists, monitoring of imported goods’ usage, and transparent parliamentary reporting. It noted the absence of audits to confirm whether waived equipment serves intended groups or lowers healthcare fees. Reports by Rameshwar Khanal’s Economic Reform Commission and Vidhyadhar Mallik suggest phasing out waivers to add NPR 300 billion in revenue, warning that unchecked exemptions risk enriching individuals without public gains.

Nepal’s tax waivers, often justified for export promotion or essential goods, lack impact assessments. “Waivers are public funds. We must track returns, not just boost private wealth,” Nepal said. The Auditor General’s call for monitoring to ensure waived equipment reduces consumer costs aligns with public demands for equitable benefits. With NPR 300 billion potentially funding mega-projects, critics argue the government’s lax oversight fuels inefficiency and favoritism, undermining Nepal’s fiscal health.

Mallik’s report estimates tax reforms could generate an additional NPR 300 billion, but phasing out waivers is politically contentious. As Nepal struggles with a 3.8% GDP growth rate and rising public debt, the unchecked waiver culture threatens long-term economic stability. Experts urge a shift toward transparent, results-driven fiscal policies to ensure public funds deliver tangible benefits.