18 June 2014

Rwanda: RRA Confident to Raise Funds for Next Budget

Rwanda Revenue Authority (RRA) is confident that the new measures it has put in place will help raise the revenues required to fund the 2014/2015 National Budget.

The government is expected to spend Rwf1.75 trillion, with 62 per cent resources domestically mobilised, in the next financial year.

The tax body projects to collect about Rwf740 billion by the end of this calendar year, which is below the targeted Rwf782 billion. It targets to collect Rwf906 billion during 2015.

There have been concerns of whether the revenue body would deliver on the Budget Expectations.

The Commissioner General of RRA, Richard Tusabe, said the body would raise extra revenue collection of about Rwf50 billion from the new tax measures spelt out in the 2014/15 Budget.

"Despite the fact that we may not hit our target, we are anticipating an impressive level of achievement of about 95 per cent in revenue collections and with the economy projected to grow at 6 per cent this year and 6.7 per cent next year, we are confident that we will achieve the targets," Tusabe said.

He was speaking during the East African budgets review breakfast meeting organised by Deloitte, a global audit firm, in Kigali.

According to Tusabe, RRA projects to raise an extra Rwf28 billion from taxes that were previously being collected by districts.

E-billing machines:

Another Rwf13 billion is expected to come from the employment of electronic billing machines, which have now become mandatory for all business operators.

The new tax measures, including the increase of customs dues on imported rice, from 35 per cent to 45 per cent, are expected to generate about Rwf7 billion in revenues with an a 10 per cent tax on airtime generating about Rwf2 billion.

Revenue officials are not only banking on widening the tax base; enhancing tax compliance measures but also the optimism that the country's economic growth is likely to pick up to 6 per cent and 6.7 per cent consequently.

The government has increased its budget expenditure from last year's Rwf1.67 trillion to Rwf1.75 trillion 2014/2015, reflecting an extra Rwf75 billion.

Meanwhile, experts have said that emphasising infrastructural development must be supported by a strong macro economic and fiscal policy if the country is to achieve a 6 per cent growth.

Jared Osoro, a Kenyan associate economist at Deloitte, said government must create a stable foreign exchange market for Rwanda to attain a strong macroeconomic stability.

"You have to ensure that growth is all inclusive and creating strong capital so that the private sector does not have to rely only on commercial banks for credit," Osoro said.

Hannington Namara, the Rwanda Private Sector Federation chief executive, said the federation will continue lobbying government so that it ensures that a stable and conducive business environment.

"There were not many surprises in this Budget. We are aware that government took a policy to support the private sector so as to deliver the Second Economic Development and Poverty Reduction Strategy objectives," he said.

The good news, he added, is that the willingness to attain self-reliance opens up a platform for both the government and the private sector to dialogue further.

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