Nepali Times
My Two Paisa
Duty on duties



When the world's cheapest car made its entry in Nepal, custom duties increased its price by seven fold than in India. The premium price vehicle owners pay in Nepal, however, doesn't translate into improved road conditions or traffic management. Motorbike riders find that the crisscrossing skills required for the license trial exam actually come handy in dodging pot holes and weaving past other cars on the road. Even those who can afford the luxury of a luxury sedan can't savour it.

At 238 per cent, Nepal has one of the highest tax rates on automobiles. If this high tax rate intends to discourage automobile import, then it hasn't worked very well. Car sales dipped a bit with the banking crisis, but there is still demand. Car dealers argue that in absence of an effective public transport system, private vehicles are no longer a luxury and the high tax rate cannot be justified if it gives no additional returns.

Last year alone, the government collected over Rs 7 billion from the import duty on automobiles, making up nearly a quarter of the total revenue from taxing imports. In addition, over Rs 3 billion was collected on vehicular taxes and Rs 800 million from driving license fees. Besides these regular charges, the government also earns everyday through highway fees, road improvement taxes and fines for traffic rule violations.

However, this year's budget allocated only Rs 2.52 billion in infrastructure development, periodic repair and maintenance of roads. The taxes we pay for our vehicles is bundled together into the national revenue, instead of being channeled towards improving road conditions and traffic management. The allocation is not enough to address the sorry state of the roads, and even the little money that does get spent leaks out in corruption and shoddy construction. So, as vehicle density continues to rise (there are almost 600,000 vehicles in the Valley alone) the roads booby-trapped with holes are choked with traffic. Few new link roads have been added, and the maintenance of existing roads has not been prioritised.

The government needs to direct its attention towards systematic and scientific traffic management, using the tax collected from the automobile industry. Other line ministries need to work in coordination, so the electricity department doesn't dig up a road that has just been paved by the road department. Better roads and improved traffic management means less traffic jams and monumental savings on fuel and time. It also means less expenditure for vehicle maintenance. If the Japanese could do it on the 9.14 km stretch from Tinkune to Surya Binayak, there is no reason we can't do it elsewhere.

Prime Minister Baburam Bhattarai has shown refreshing symbolism by adopting a Mustang as his official vehicle. But what good is that if the roads he is going to drive on will reduce the lifespan of his axles? Bhattarai should direct his next infrastructure minister to show results on the ground.

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1. B
I like this article...very relevant:)

2. Bijay
So, where does the collected tax money go? Anything of substance in Nepal was built using foreign aid, eg. all the highways were build by Japan/India/China. Where is the money actually spent?

3. Sherpa Observer
Rich people buy expensive vehicles just to go shopping or take their family out or drop their kids at school that is just a few yards away from their home. But they never demand better roads in return. Most of these people don't even know they need better roads because all they do is go to Thamel, New Road, Durbar Marg. The poor people have to rely on two wheelers as a necessity to commute and they are the ones who have to travel through bad roads to get to their work. Those who pay must know how to demand!

(11 JAN 2013 - 17 JAN 2013)