Tax Reform Committee Proposes Phased Removal of LPG Subsidy Within Three Years

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KATHMANDU, June 20: The high-level study committee for tax reform has recommended the government to remove the subsidy provided to citizens on Liquefied Petroleum Gas (LPG) or cooking gas within three years.

The committee has recommended the government to revise the electricity tariffs for household consumption in order to increase the use of hydropower for domestic purposes and to remove the subsidies currently provided for LPGs.

Currently, Nepal Oil Corporation (NOC) is facing the most losses in LP gas. The committee proposed to remove the subsidy completely within three years.

Even though the government has conducted various studies on implementing separate cylinders for domestic and industrial purposes, it has not yet reached a conclusion.

The committee has recommended green tax on aviation fuel arguing that the government has not levied a pollution tax on aviation fuel.

The government has introduced the concept of green tax in the budget of upcoming fiscal year 2024/24. Under this heading, the government has imposed a tax of Re 1 on petroleum products.

In the past, excise duty was levied on non-agricultural industries and brick factories. Now, the committee has recommended to the government to levy a  green tax on industries that produce more pollution.

The committee has also suggested imposing an additional green tax along with customs duties on coal, which is considered environmentally hazardous.

The committee has suggested the possibility of imposing a green tax on goods that were previously subject to excise duty. It recommended conducting a study to expand the scope of this tax. The committee concluded that this will enhance Nepal’s International image.

The committee recommended industries to establish waste recycling centers to encourage green economy, utilizing recycled materials, and generating energy from waste. It is also stated that required tax exemption and facilities should be provided for such industries.

 

Source: Republica