KATHMANDU, November 15: With just a week to go until the November 20 general elections, social media sites, especially Facebook, are flooded with election-related advertisements from candidates and parties participating in the polls.
Most of the contestants used information technology by advertising through Facebook, Twitter, Instagram, TikTok and other social media platforms.
Advertising on the social platform seems inevitable, but it has links to economic dimensions while examining election-related activities.
Budding lawmakers are known to neglect existing laws and tax discipline for online ads due to poor oversight mechanisms and state loopholes.
According to the Meta Ads Library report published by Meta, Facebook’s parent company, a total of 5,560 Facebook pages and profiles were used to boost election ads in the past month.
This number corresponds to paid advertisements made solely for electoral and political programs in view of the upcoming elections.
As shared by Meta Details, US$67,036 was spent through Monday afternoon on online advertisements of election-related content.
The Nepal Rastra Bank (NRB) said the country’s foreign exchange reserve was running low, alarming economic indicators in disarray. Election campaigns and advertising in US dollars could cost more to the country’s balance of payments.
The massive flow of online advertisements has not only reduced the balance of payments, but is also a violation of laws.
According to NRB, the transactions of election advertisements that take place on social networking sites are in doubt.
Executive Director of NRB’s Foreign Exchange Management Department, Ramu Poudel, said the dollar card was issued to spend up to US$500 per year to someone residing in Nepal.
“Only US$500 could be spent in one year from Nepal. But, if someone has earned US$5,000 in a year, additional credit card facilities could be obtained in such a situation,” Poudel added.
Policy level issue
A government study shows that there is a huge loss of revenue because social sites providing their services in Nepal are not subject to taxation.
According to a report prepared by the conduct of a study regarding the increase in revenue of reach-2079 by the Revenue Advisory Committee, a trend of advertising on social networking sites has suddenly increased in recent times. “A trend of advertising on social networking sites, which have no legal registration, has suddenly increased in Nepal. These social sites have raked in billions of rupees every year in Nepal.”
After the Revenue Advisory Committee suggested that social sites withdrew huge amounts of currency from Nepal and should be taxed, the government in its current fiscal year budget 2022/ 23, mentioned the possibility of placing these transactions under the fiscal domain.
Similarly, the Director General of the Department of Inland Revenue, Ritesh Kumar Shakya, said that provision for digital services tax was first made through Economic Law-2079. “A 2% Digital Services Tax and 13% VAT have been imposed on digital services available to customers in Nepal.”
“Some companies have filed applications and are in the process of being registered and some have expressed interest in registration,” he said.
Shakya mentioned that the Department has launched a digital portal for registration of social and internet based businesses that provide services in Nepal.
There are 13.3 million Facebook users in Nepal in 2022, the report says referencing data from dataportal.com.
Similarly, Facebook’s advertising revenue per advertiser had reached US$40.96 in 2021. Facebook earned an income of more than six billion rupees per year from the viewing of advertisements by Nepalese Facebook users.
Which candidate spent how much?
Advertisements in social networking sites are presented in such a way that the information only reaches a targeted group of a certain geography, gender and age range. Access to these boosted messages is based on the money spent on it.
Candidates hoping to contest the upcoming legislative elections are taking advantage of social networking sites and running advertisements for their targeted constituencies.
Meta stat shows that Shree Ram Gurung, candidate for House of Representatives (HoR) from Kathmandu Constituency No. 5, spent the highest amount – USD 3,125 – for a month on boosted posts.
Similarly, Sushant Shrestha, who is running as a member of HoR as an independent candidate from the same constituency, has already spent $2,238 on paid advertising for his candidacy.
Kiran Poudel of CPN-UML, HoR member candidate for Kathmandu Constituency No. 1 has spent USD 1,350 so far. Dr. Suresh Basnet, a candidate for HoR member from Bhojpur Constituency No. 1, paid $1,800 to boost his Facebook account.
Similarly, $1,268 was spent to boost the Facebook page titled “Let’s re-elect development personality Ishtiyaq Rai, let’s make Nepalgunj prosperous,” according to Meta statistics.
To boost the messages posted by the Facebook page of Ganesh Parajuli of the Rastriya Swatantra party, candidate HoR member of Kathmandu constituency No. 7, 937 USD was spent.
Jagannath Lamichhane, Provincial Assembly Member Candidate for Kathmandu Constituency No. 5 (2), spent USD 904 to boost his Facebook page. He is running as an independent candidate.
In the Facebook account managed in the name of Som Prasad Pandey, 842 USD have already been spent while 717 USD for the account named after Pradeep Poudel, 678 USD in the name of Anup Bohora, 666 USD in the name of Ranju Darshana and 652 for Upendra Yadav were spent.
To energize the “Why Nepali Congress?” on Facebook, $535 was spent and $535 was in the name of Rabindra Mishra, the meta stat revealed.
There’s a “No, not yet” campaign going around Facebook. The Election Commission of Nepal had written to the Nepalese police to identify and summon those who were leading this campaign.
A case has been filed against this campaign in the Supreme Court. The highest court in the land ordered no action against the campaign.
In India, 18% GST and 2% TDS are levied on online advertisements. Google, Facebook are registered in Bangladesh and these companies pay 15% VAT.
In this regard, if only 15% of the tax were levied on the revenue generated from the boosted messages (online advertisements) of Nepal, more than 9 billion rupees would have been collected in the national coffers. However, only a nominal amount appears to have been paid as tax for the full amount won.