KATHMANDU, June 23: The government’s unfair tax system implemented through the budget for the fiscal year 2023/24, has helped the market prices of a number of essential goods soar, say consumer rights activists.

Speaking at a program on Thursday, consumer rights activists underscored that the government’s decision to impose value added tax (VAT) on a number of foods has caused the prices of the essentials to escalate. “While the government is rendering less priority to effective market monitoring, the imposition of VAT on kitchen items like onion and potato will drain more expenses of consumers,” said Jyoti Baniya, chairperson of the Consumer Welfare Protection Forum.

The government through the budget had announced to remove 170 goods from the lists of goods receiving a VAT discount. These include potato and onion. With the provision in place, a number of vegetables, fruits and other food items now have to pay 9 percent agriculture service charge, 1.5 percent advance income tax and 13 percent VAT.  

Citing a slowdown in the import of these goods, traders have almost doubled the market prices of potato and onion. Likewise, the prices of lentils have increased by Rs 20 per kg, while gram is expensive by Rs 10 per kg.

With the low volume of domestic production of potato and onion, Nepal has been relying on these products imported from India. In the last fiscal year 2021/22, the country imported potatoes worth Rs 8.18 billion while the figure for imported onions was Rs 6.17 billion.  

Baniya said the government’s decision will help promote illegal trading of potatoes and onions. “This will take down the government revenue while hitting consumers with exorbitant prices.” 

 
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