Nepal taxes not just electric cars, but also books

Finance Minister Yubaraj Khatiwada came under a lot of flak in this year’s budget for what many said was his short-sighted decision to impose a hefty tax on battery operated cars. This was not the first time he was ridiculed for an absurd decision: in last year’s budget speech he announced a 10% customs duty on books.

In both cases, he has refused to budge. He said the tax on imported books was needed to protect the domestic printing industry. And he said people riding electric cars were rich enough to be taxed. 

While some say they understand why there may be a case for taxing luxury battery operated cars, it makes no sense to tax imported books.

Educators, students, publishers, booksellers and book lovers in Nepal are outraged, saying that the government ignored UNESCO’s Florence Agreement, which states that no taxes or customs duties can be levied on books and publications. 

And, ironically, it looks like Nepal’s Communist government doesn’t like books by leftists. In February, Tri-Chandra College student Sudal Rai was accosted by three police officers, when he was quietly reading a book in the college library. Police found in his bag the book From Bihar to Tihar by Indian leftist student leader turned politician Kanhaiya Kumar and arrested him.

“You cannot arrest a person for reading a book, it is harassment and a restriction on the freedom of knowledge, but it exposed the government's attitude on books,” says Nabin Tiwari, who with two other friends staged a week-long protest ‘Make Books Tax-free’ protest at Patan Darbar Square. “Books are not like other commodities that you can tax.”

That protest had to end because of the COVID-19 lockdown, but Tiwari and his team are still lobbying to have the book tax lifted – so far without any result.

Managing Director of Ekta Books, Ram Chandra Timothy, says his store has been badly hit first by the tax on imported books, and now by the lockdown and closure of schools. He says the 10% tax is just the tip of the iceberg because there is also an Indian tax of 5%, and there are additional costs which prices books out of range of most buyers.

“The 10% tax may seem small, but we have to bear additional costs that makes each book 33% costlier,” says Timothy, who is the past president of the National Booksellers' & Publishers' Association of Nepal.

Wisdom Book Store in Patan is also struggling due to the double whammy of the tax and lockdown, and has not received any new inventory since last year. The shelves are empty and customers turn away disappointed. Owner Bipin Audhiya says: “Our Indian suppliers have bluntly said 2020 ko toh bhool jao, kuch book nahi aayega. (Forget 2020, you won’t get any books this year).”

Most affected are the students who rely heavily on international text books for science and other subjects, which are mostly imported via India. 

“Nepal imports 90% of its books from India. There is no way Nepali publishers have the capacity to print these books, and it is going to affect our education system,” says activist Tiwari. “How can Nepali students pay $50 for a book?”

Basanta Basnet, the former editor of Nepal weekly magazine says a customs duty on books is absurd and unfair. He adds, “A book culture was beginning to take hold in Nepal, now knowledge has become unaffordable. Books are being taxed while chocolates are being susbidised?”

In this year’s budget speech, besides increasing the tax on electric vehciles, Minister Khatiwada reduced the tax on imported chocolates, reportedly at the behest of a large trading company. 

Kiran Krishna Shrestha, publisher of Nepalaya Books, says all the benefit of a customs duty on books will be reaped by Nepal’s printing presses and not publishers and readers. He calls the book tax “illogical” and says it will directly affect readership.

The customs duty is based not on the sales value but on the invoice value of books, and a book with a $40 price tag printing on its back cover will be taxed on that amount and not on the actual shelf price. 

“The whole question is whether you consider a book a commercial product or part of the knowledge industry,” Shrestha explains. 

Nabin Tiwari argues that levying a duty on books restricts freedom of knowledge, and this is tantamount to muzzling freedom of expression of citizens. He adds: “What example do we want to set out in the world? It all depends what the government does now.”