Suffering Carpets?
MENTION of Nepal’s exportables
invariably bring to mind the distinguished position carpet has held for years. It is one
of the top foreign exchange earners of this country which is always hard pressed for
foreign exchange to finance its development needs. Despite the recognition that carpet
receives as an exportable that has a pride of place in what Nepal exports to the world,
this item has undergone a lot of vicissitudes. The ups and downs it experiences are
directly reflected on the country’s foreign exchange reserves. Its importance being
such, it is a matter of concern to hear, as now, from carpet manufacturers and exporters
speakkng in one voice that the situation of carpet exports is perilous. Carpet
manufacturers and exporters came together the other day at an interaction organised by
Nepal Carpet Exporters’ Association to discuss, as the theme had it, "Income Tax
on Earning from Export". Clearly, carpet people were chafing at the income tax being
leived on their earnings, calling the move a dicouraging factor that tells upon the carpet
exports. The figures of nosediving carpet exports presented at the gathering was indeed
alarming. It was said the export figures of carpet had ulmost declined by a whopping 50
per cent in comparison to the total volume till October-December 1999. They blamed the
government for bringing this about and warned that the export situation would further
worsen if adequate measures were not taken promptly. By imposing a 0.5 per cent tax on
export of every item as service charge and an additional charge of 40 per cent in income
tax and five per cent tax on dividends, the government had contributed to dampen the
carpet sector. These go against the Export Policy 2049 B.S. they slammed.
Whatever the merits of their accusation, one
thing is clear. Carpet is too valuable an item in the scheme of Nepal’s exportables
to ignore the current claimed decline. If the new measures have created confusion and
served as dampeners in the entrepreneurship and industriousness of the carpet
manufacturers and exports to a degree that carpets continue to record a downward slide, a
thorough review of the measures must be undertaken without delay. The carpet people plan
to lobby with the government to have the measures revised. If their arguments hold water
and their lobbying is not motivated solely by a desire to shirk paying a legitimate income
tax, the government would do well to listen to them.
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