The Parliamentary Industry, Commerce and Consumer Welfare Committee on Tuesday directed the government to remove the value added tax (VAT) imposed on liquefied petroleum gas ( LPG ), saying that it was unfair to impose taxes on such essential goods.
Nepal Oil Corporation ( NOC ) has been imposing Rs 151 on a LPG cylinder as VAT. However, Finance Minister Ram Sharan Mahat said that removing VAT would not help smoothen LPG supplies. “The government has been collecting large amounts of tax revenue from petroleum products, and the removal of taxes could lead to a huge deficit in the development budget,” he said.
On April 2014, an 11-member parliamentary committee formed to recommend measures to reform NOC had recommended waiver of taxes, including VAT, levied on LPG .
On Tuesday’s meeting, lawmakers asked the government to take the alarming shortage of LPG seriously and ensure smooth supplies. They criticized the government for being so helpless in ensuring supplies of cooking gas and bowing to LPG dealers. “The government has bowed before traders who are in the practice of earning abnormal profits through malpractices in the LPG sector,” said lawmaker Subhas Chandra Thakuri.
NOC has accused traders of hoarding and black marketing in cooking gas claiming that it had supplied more than the required amount of LPG in the market.
Talking about the government’s efforts at market intervention by supplying gas through National Trading, lawmaker Nagendra
Tharu said the government should have solved the problem through proper regulation and monitoring of the market. Parliamentarians also showed concern over lack of transparency in the management of LPG supplies.
Commerce Minister Sunil Bahadur Thapa said that the provision of dual cylinders which the ministry had planned to implement shortly could help address the recurrent LPG shortage.
“The provision will help to maintain transparency in the quantity of petroleum products sold for commercial purposes,” he said. Thapa added that his ministry was planning to restructure the NOC board that is now led by the commerce secretary.