Addis Fortune (Addis Ababa)
18 November 2008
The Revenue and Customs Authority (RCuA) has fallen short of meeting its target of collecting 2.5 billion Br monthly in the first quarter of the current fiscal year.
RCuA had set an ambitious plan following its new structure to collect 30 billion Br of the 54.3 billion Br budget endorsed by the Federal Government for the current fiscal year. However, its performance in the first two months of the year mark a significant decline in the monthly revenue collections envisaged in the plan.
To meet the targeted amount for the year, the authority should have collected at least 2.5 billion Br each month of the fiscal year from direct and indirect taxes.
The target put forward for July 2008 alone, the beginning of the financial year, was 1.9 billion Br. However, the authority only succeeded in collecting 1.6 billion Br - a 13.3pc miss of its target.
Similarly, its performance in August 2008 showed a significant shortfall. It collected just 1.8 billion Br, a nearly 30pc deficit against its plan.
Prime Minister Meles Zenawi, who appeared before Parliament in October 2008, told members of the House that tax collection has been a major challenge for the country. He said the inefficiency of the authority, and unwillingness of the taxpayers to execute their duties, have been serious hindrances to the collection of the amount of money needed for the budget year. This has caused the widening the budget deficit of the government.
According to the PM, 13,000 major taxpayers are not paying exactly what they should.
Taking obvious weaknesses into account, the government restructured the fragmented revenue collecting institutions into one authority in a bid to synchronize their efforts in collecting revenue. The restructuring is expected to bring about much needed efficiency starting this year, and in effect reduce the current year's deficit substantially.
This fiscal year's shortfall is projected to reach 2.6pc of the GDP, but the government has placed its confidence in the revenue collecting institution and in the assistance to be obtained from the International Monetary Fund (IMF), which, according to the Premier, has promised to assist his government narrow the budget deficient to 1.5pc of the GDP.
The government's stance has also been reflected by Melaku Fenta, director general of the authority.
"It would be the authority's failure if we fail to collect the 30 billion Br revenue," he told journalists a few months earlier while briefing them about the finalization of the Business Process Reengineering (BPR) that resulted in restructuring the institution.
Disappointed officials at the institution were last week busy instructing the staff under their respective departments to do their best to amass the targeted revenue.
Taxes collected from inland transactions are the major area of the failure within the two months; the authority planned to collect 1.08 billion Br from this source in August 2008, but its actual performance has not moved anywhere beyond 641 million Br, a figure that shows a 41pc deficit from the plan.
Though revenue obtained from taxes imposed on foreign trade seems substantial compared to the inland performance, it has also registered a 21.8pc miss of the 1.4 billion Br target, fetching 1.1 billion Br.
It is not the first time that a revenue authority has failed to meet its target. Last year, while under the umbrella of the Ministry of Revenue, the then Customs and Federal Inland Revenue authorities targeted collecting 26.3 million Br but amassed 22 billion Br instead.
Officials at the authority were not immediately available for comment.
By YOHANNES ANBERBIR
FORTUNE STAFF WRIITER
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