Comprehensive policy underway to expand non-tax revenue base

A comprehensive policy is in the making to strengthen internal resource mobilisation through a broader framework for non-tax revenue collection and management and plugging systemic holes, officials said.

Titled 'Policy for Non-Tax Revenue (NTR) and Other Tax Revenue Collection and Proper Management 2026,' the draft policy proposes a series of reforms aimed at reducing reliance on foreign loans and grants by diversifying revenue sources.

The proposed framework places strong emphasis on environmental taxation, digital revenue systems, and stricter financial discipline for state-owned enterprises (SOEs), according to officials familiar with the move.

The initiative is part of a wider effort to improve the country's fiscal capacity and enhance transparency in public revenue collection.

As part of a shift toward environmentally aligned fiscal measures, the policy proposes the introduction of several "green" levies or fees.

A carbon tax is planned for large polluting entities, initially targeting industries emitting more than 25,000 tonnes of carbon dioxide (CO?) annually, says a source concerned.

The draft also proposes pollution-related fees covering waste management, plastic use, and broader environmental contamination.

In addition, private vehicles that are not environmentally friendly could face higher carbon-emission charges, the source adds.

The policy also proposes the introduction of Electronic Road Pricing (ERP) systems in metropolitan areas and major highways to manage traffic congestion and raise additional revenue.

Under the proposed system, vehicles would be  charged automatically through electronic transponders when passing designated ERP gates.

Charges could vary depending on traffic conditions, with higher fees during peak hours intended to discourage congestion and encourage the use of public transport.

To strengthen transparency and prevent revenue leakage, the draft policy emphasises a transition to a fully digitised revenue-collection system.

The officials say the policy proposes the creation of a centralised integrated database that will allow real-time monitoring of revenue collection across ministries and agencies.

All government payments will also be required to use automated challan systems developed by the government.

The policy further requires strict adherence to the Treasury Single Account (TSA) system so that all collected revenues are deposited directly into the government treasury.

Under the proposed rules, government offices would not be allowed to hold revenue in private bank accounts without prior approval from the authorities.

The policy also proposes stronger financial discipline for state-owned enterprises.

The SOEs would be required to deposit at least 30 per cent of their net profit after tax into the government treasury as mandatory dividends.

The government agencies receiving loans from the state would also be required to follow strict repayment schedules.

Failure to comply could result in the imposition of penalty interest, the officials say.

The policy outlines changes to the management of government-owned or khas land, aiming to move away from the traditional model of perpetual ownership.

Instead, the government plans to promote long-term leasing arrangements to improve utilisation of public land.

The draft also proposes establishing a land- bank system to manage unused government land and facilitate its use through public-private partnership (PPP) arrangements.

To implement the policy, the government plans to establish two key oversight bodies.

A high-level task force, chaired by the finance secretary, would review and approve revenue-related fee structures across ministries.

Meanwhile, fee revision committees would evaluate government service fees every three years using a full-cost -analysis approach.

By formalising the collection of fees, fines, dividends and environmental levies, the government expects to create additional fiscal space for development spending.

"Successful implementation of this policy will directly increase the revenue-GDP ratio, a vital indicator of economic self-sufficiency," the draft document notes.

If approved, the policy will provide a structured framework for managing non-tax revenue sources and strengthening public financial management across government institutions, the senior official added.

Upon the effective date of the draft policy, the 'Non-Tax Revenue and Non-NBR Tax Revenue Management Guidelines 2024' will be deemed to be repealed.

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