Kathmandu, June 1: Finance Minister Dr Swarnim Wagle has said the government will not backtrack on its decision to impose VAT on electricity consumption but is working on measures to ensure that end consumers are not adversely affected.
Speaking at a post-budget discussion organised by the Nepal Economic Journalists Association on Monday, Wagle said the government is exploring various options to protect consumers and plans to introduce relief measures from the beginning of the next fiscal year in mid-July.
“VAT on electricity has come, and it will remain, but we are looking at ways to ensure consumers are not burdened,” he said.
The provision in the new budget imposing VAT on consumers who use more than 50 units of electricity per month has drawn widespread criticism from businesses, consumer groups and energy experts.
Defending the policy, Wagle said the government had taken a bold step that previous administrations had discussed but lacked the courage to implement.
“There were discussions in the past, but no one was willing to make the decision,” he said.
The finance minister argued that a system based solely on subsidies and free distribution was unsustainable, warning that such an approach could lead to economic difficulties similar to those experienced by Venezuela.
According to Wagle, the government is gradually shifting its tax policy toward consumption-based taxation rather than relying primarily on income-based taxes.
“We are moving toward a consumption-based tax system rather than an income-based one,” he said.
Wagle also said the budget is intended to provide a policy direction for the next five years and reflects the government’s broader economic reform agenda.
“With good ideas and good intentions, we aim to lay another brick in strengthening the economy,” he said.
People’s News Monitoring Service
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