Kathmandu, May 9: During the election campaign, Rastriya Swatantra Party (RSP) Vice Chair and now Finance Minister Swarnim Wagle made two major promises to voters across different sectors. First, he pledged to reduce the 300 percent tax imposed on vehicles. Second, he vowed to raise the one percent personal income tax slab threshold to Rs 1 million.
Wagle is now steering the country’s economy as finance minister. That also places him in the key position to fulfill the very promises he made during the election. Yet signs suggest the upcoming budget is unlikely to bring the kind of tax cuts or income tax relief he once announced. According to an official at the Finance Ministry’s Revenue Advisory Committee, failed attempts to widen the tax net have left the government struggling to maintain treasury balance, making it difficult to adjust tax rates in line with earlier commitments. Election promises, it turns out, often collide headfirst with spreadsheets and empty state coffers. A timeless political ritual.
Over the past month, the government made two major attempts to expand the tax base. First, it tightened regulations on the transport of goods through land routes. Second, it introduced a rule requiring imported goods entering through customs points to carry a Maximum Retail Price (MRP) label. These two measures were considered key tools for broadening the country’s tax net. But both efforts now appear to have largely failed.
After facing backlash over customs valuation exceeding Rs 100, the Finance Ministry recently issued a clarification stating that it was merely implementing a policy introduced by the previous government. It also assured the public that the provision would not continue in the new budget. The development effectively signals the collapse of the government’s effort to tighten customs enforcement.
Meanwhile, the government has also retreated on MRP implementation. Initially, it had insisted that goods without fixed MRP labels would not be cleared through customs. It has now softened that stance and agreed to clear goods based on self-declared pricing.
Although the government adopted this middle-ground approach after customs clearance disruptions began seriously affecting revenue collection, ministry officials themselves do not appear confident about the long-term success of the measure.
A joint secretary involved in budget preparation said, “We are not in a position to estimate resources on the assumption that this system will be effectively implemented. Therefore, we may have to structure the budget’s revenue sources in the traditional way.”
Finance Minister Wagle himself has reportedly hinted at the same reality during discussions with business groups. According to Surendra Upreti, president of the Nepal Automobile Dealers Association (NADA), Wagle recently urged the association’s office bearers not to expect major reductions in taxes. Politics promises discounts. Bureaucracy sends the bill later.
People’s News Monitoring Service
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