Nepali Times Asian Paints
Economic Sense
Taxing books


For a country that boasts that it ranks 'only' 10th from the bottom in GDP per capita in the world, what do you expect?

Nepal has one of the lowest literacy rates in Asia, especially among girls. Education is politicised, higher education is over-commercialised. So why not tax books, right?

Of the many absurd things that have transpired in the past year or so, the new tax on books in the new budget is probably the most absurd. Surely the intention in the beginning of the 21st century is to make education policies less cumbersome, education fees more affordable and books affordable?

Nepali publishing has just been coming of age with few private companies really taking the risk to invest in producing world-class material such as the press that prints this paper. However, there is little apart from regular periodicals and reports for the report-hungry development communities-there is little serious publishing that goes on. The bulk of the printing that takes place on a recurring basis is educational books that are consumed by the growing number of students and these are mostly imported.

Most of the books used in the ever-mushrooming colleges and universities are not published in Nepal. Therefore, the new tax impacts students directly. In a country where good libraries are as alien as the concept of good governance, it is the young who will directly suffer. We do not have separate student editions, as in many countries, nor do we have a well operating market for used books or proper libraries. Students have no option but to buy the books they need.

It is nothing new for competition-shy Nepali businesses to seek protection. They have done it in the past and they will do it in the future. And surely it is a global tendency for homegrown enterprises to ask for protection. Therefore, this provision can make some local businesses happy as they can surely have a competitive edge. Of course, we have an inefficient government monolith in this sector that wants to continuously produce sub-standard products and ensure that some individuals and their patrons benefit. But why sacrifice a sensitive issue like book pricing at the altar of individual interests?

We need to also understand that we ourselves have embraced WTO membership, which we like to flaunt. One of the key WTO issues is Intellectual Property Rights. Therefore, Nepali companies will really need to work around the copyright of books before they even think of publishing them here.

With a fraction of a non-student population that reads and a fraction amongst them that actually buy and read, there is little market for licensing of publications. The only option is to import, to tax it more means directly affecting the prices that consumers pay. Pirating audio CDs, video CDs and DVDs is easier as the cost of piracy is low, but to pirate books you need volumes and surely the intention of the new tax is not to encourage illegal printing.

Many have argued that this insignificant tax hike should not affect pricing too much and since book imports are not significant, why make this a big issue? The Beed feels the same but differently: if the Finance Ministry can't really quantify what additional duties will be raised or how much import substitution is possible, why do it? Why send the wrong signal?

We are telling the world that we want to reform, we want to promote education, we need more assistance in this sector. And then we go and increase the tax on books.

(11 JAN 2013 - 17 JAN 2013)