KATHMANDU: In a major consolidation of customs-point revenue collection, the government has announced the integration of various scattered fuel, infrastructure, and pollution levies into a single, unified “Green Tax.”

Presenting the federal budget for Fiscal Year 2026/27 before a joint session of the Federal Parliament on Friday, Finance Minister Dr. Swarnim Wagle declared that existing duties—such as the Infrastructure Development Tax and the Road Maintenance and Improvement Fee collected at border customs points—will be streamlined under this new green tax regime.

This structural transition directly executes the government’s policies and programs presented by President Ram Chandra Paudel on May 11, which pledged a phased shift toward an integrated environmental taxation system.

Nepal has historically collected multiple distinct environment and road levies. The government initiated an infrastructure tax on diesel, petrol, and aviation turbine fuel (ATF) at a rate of Rs 5 per liter in Fiscal Year 2015/16, originally intended to domestically fund the 1,200 MW Budhigandaki Hydropower Project.

According to Nepal Oil Corporation data, the state amassed a staggering Rs 159.32 billion over the past decade through this levy alone.

The tax was rebranded as the “Infrastructure Development Tax” in 2019 and doubled to Rs 10 per liter.

In November 2023, a cabinet decision formally earmarked Rs 5 of that pool specifically for the Budhigandaki project, while the remaining Rs 5 had been flowing directly into the state’s central treasury without a dedicated spending mandate.

The newly announced unified Green Tax aims to bring transparency and structural cohesion to how these environmental and infrastructure revenues are accumulated and deployed.