Tax from transport lower than expected

KATHMANDU, NOV 21 -First quarter growth in revenue collection from the transportation sector fell short of expectations. The government collected Rs 2.49 billion in vehicle tax in the first three months of the fiscal year, a marginal increase of 0.8 percent year on year. The Department of Transport Management earned Rs 2.47 billion during the same period in the last fiscal.

The less than expected growth in revenue collection has been attributed to the government’s failure to implement fully a new type of driving licence test adopted last April. The number of people obtaining driving licences has fallen as the trial system planned to be implemented nationwide has not happened.

Normally, around 200,000 individuals apply for driving licences each year, according to department officials. Each applicant pays Rs 1,100 on an average for a driving licence irrespective of its category. Automobile dealers have been saying that sales of motorcycles have not grown as projected because the new trial system has not been put in place.


Department officials said that the government’s income from driving licence fees had come down by around 50 percent. The department collected Rs 164.26 million in vehicle permission and driving licence fees during the review period compared to Rs 322.41 million before. The new trial system was launched seven months ago, but most of the department’s zonal offices have not been able to put it into practice due to lack of infrastructure and adequate open ground.

“We started the new trial system on April 14, 2013, but so far it has been implemented only in Kathmandu, Pokhara, Butwal and Nepalgunj,” said Sarad Adhikari, technical director at the department. He added that preparations were going on to operate the trial system at the rest of the zonal offices within two months.

Even though there has been a decline in revenue collection from the issuance of driving licences, the government’s income from other tax heads such as vehicle tax, urban road maintenance tax and the transport sector’s income has gone up. The department collected Rs 1.58 billion in vehicle tax, Rs 675.10 million in road maintenance tax and Rs 70.85 million in taxes on the income of transport sector.

Meanwhile, non-tax revenue collection has come down to Rs 910 million from Rs 956 million during the same time last year. Vehicle tax collection in Q1 was up 17 percent compared to the target of Rs 1.34 billion. During the same period in the last fiscal year, the government took in Rs 598.36 in road maintenance tax, Rs 1.51 billion in vehicle tax and Rs 38.60 million in taxes on the income of the transport sector.