NATIONAL 5 (Spotlight Weekly)]

Get The Bill

The VAT Office launches campaign to make consumers aware about their rights

By A CORRESPONDENT

Do you ask for a receipt after paying money to the shopkeeper? If not, you must do so, says a message over loudspeaker atop tempos in the thoroughfares of the capital. The campaign, according to officials, is designed to make people aware about their rights thereby plugging revenue leakage.

"The campaign aims at making both the sellers and buyers aware about their duties and responsibilities," said Navaraj Bhandari, chief of VAT (Value Added Tax) Office, Kathmandu. "We will take action against the traders if they don't give receipts to the consumers even after collecting VAT from them."

Consumers at a shop : Bill please !

Officials say lack of awareness on part of consumers is mainly responsible for the leakage in revenue. As the consumer doesnít ask for a bill upon making payments, this provides room for misappropriation by the traders. There are cases when traders charge VAT from the consumers but donít pay it back to the government, they said.

After initial tussle with the business community has been over regarding the implementation of the controversial tax, officials are now targeting general consumers. They say that when consumers start arguing about their rights, it will be much difficult to avoid the tax. The officials have planned to observe ëVAT weekí next month, in line with the ëTraffic Weekí with the help of school students as part of their campaign.

Businessmen, on their part, complain that this could create crisis of confidence between the seller bad buyer. "Most of the consumers donít know that all the business enterprises donít need to be registered for the purpose of VAT," said a businessman.

After the introduction of VAT in 1997, the government has been taking the new tax as the main form of revenue collection. Nearly 17,000 firms from all over the country have registered themselves with the VAT Department so far. Nearly half of them are situated in Kathmandu alone. This is almost double the number of taxpayers (9082) in the year 1998/99.

In the last fiscal year 1999/00, the government has collected VAT amounting to Rs 10420 million as against the target of collecting Rs 10460 million. This is up by 32 percent compared to the previous year. "This shows a very encouraging trend," said Dr. Rup Khadka, an expert with the VAT project. "The VAT has now become the largest source of revenue." Earlier, customs stood as the largest source of revenue.

This year the government has set the target of collecting Rs 13500 million in the current fiscal year.

One of the main concerns of businessmen has been hassles in different forms of taxation. To address such problems, the Fiscal Act has made provision that the record of sales and purchase kept by a business firm for VAT will be valid for the purpose of income tax also. The Customs Offices will also recognize the transaction value shown by the businessmen. "Such provisions should no room for the business community to complain," said Dr. Khadka.

According to Bhandari, the VAT office of Kathmandu collected a revenue of nearly Rs 2.25 billion (including contract and entertainment tax) last year. This is roughly half of the total receipts from VAT all over the country. This includes more than Rs 50 million collected by the Kathmandu office as penalty from the traders who violated the law.

Though it will take some time for Nepali consumers to internalize the VAT culture, it can be said that the new form of tax is going to stay here.