The Ministry of Finance claims that the government lost over 60 billion rupees in revenue in the last fiscal year alone due to the subsidies provided to electric vehicles. In recent years, the government has been offering significant incentives on electric vehicles to increase the consumption of domestically produced electricity, reduce pollution, and replace the import of petroleum products.
Kathmandu — After the government adopted a policy to promote electric vehicles, the revenue generated from the hire-purchase sector has started to decline significantly. In recent years, the government has been offering substantial incentives on electric vehicles to increase the consumption of domestically produced electricity, reduce pollution, and replace the import of petroleum products.
Former finance ministers and high-ranking officials at the Ministry of Finance say that due to this policy, the government lost over 60 billion rupees in revenue in the last fiscal year alone.
The government’s policy is to reduce the import of petroleum vehicles by promoting electric vehicles. However, customs data shows that the import of other vehicles has also increased along with electric vehicles. This indicates that the government’s goal of reducing the import of petrol and diesel vehicles has not been successful. While substantial incentives are being offered for electric vehicles, the import of petrol and diesel vehicles is also on the rise.
The auto market is one of the main sources of government revenue. ‘Until about three years ago, this sector contributed 25 to 30 percent of the government’s annual revenue collection,’ said Dhruva Thapa, former president of the NADA Automobiles Association of Nepal. ‘After the government offered significant tax exemptions on electric vehicles, the contribution of this sector to revenue has also decreased.’ Thapa stated that while this sector used to contribute around 100 billion rupees annually to the government until three years ago, it has now reduced to just 35 to 40 billion rupees.
In the last fiscal year, the government did not impose any excise duty on the import of electric vehicles, and only a 10 percent customs duty was applied. However, this year, the government has increased both customs and excise duties on the much-discussed electric vehicles (EVs). According to the new regulations, electric vehicles with up to 50 kilowatts will now be subject to a 15 percent customs duty and a 5 percent excise duty. Previously, there was no excise duty, and only a 10 percent customs rate was applied. The government has also increased the customs and excise duties by an additional 5 percent for EVs with 51 to 100 kilowatts.
Previously, there was a 15 percent customs duty and a 10 percent excise duty. For electric vehicles with 101 to 200 kilowatts, the customs duty has been increased to 30 percent and the excise duty to 20 percent. Previously, the customs duty was 20 percent and the excise duty was also 20 percent. For vehicles with 201 to 300 kilowatts, the customs duty has been increased to 20 percent, while the excise duty has been reduced by 10 percent. For vehicles with more than 300 kilowatts, the customs duty has increased by 20 percent, and the excise duty has been reduced by 10 percent. Overall, there has been a 10 percent increase in taxes. For the first time, a green tax has been introduced. Green tax of up to 1 percent has been applied to imported goods such as coal, stone coal, and petroleum products.
According to customs department data, over the past five years, the average revenue collected from the import of all types of vehicles and their parts has been around 65.5 billion rupees. In addition to this, revenue from petroleum products, value-added tax (VAT), and income tax from vehicle sales companies further increases the revenue generated from this sector, according to experts.
According to the department, in the last fiscal year, revenue of 57.9 billion rupees was collected solely from the import of all types of vehicles and their parts. The previous year, 33.33 billion rupees was collected from this category. This is the year when the government halted the import of 10 types of goods, including vehicles. In the fiscal year 2078/79 (2021/22), revenue of 90.5 billion rupees was collected from the import of all types of vehicles and their parts.
According to the Ministry of Finance, in the last fiscal year, revenue of 26.83 billion rupees was collected from electric vehicles worth 13.59 billion rupees and petroleum-fueled jeeps, cars, and vans worth 13.24 billion rupees. In the fiscal year 2079/80 (2022/23), electric vehicles worth 3.39 billion rupees and other jeeps, cars, and vans worth 8.77 billion rupees were imported.
Source: kantipur
