[PHOTOS]: Govt strategy to widen tax base

The Government is looking to technology to boost tax administration and revenue collection to finance next year’s budget, with Finance Minister Claver Gatete proposing to purchase Electronic Billing Machines (EBMs) to bring all value added tax (VAT) eligible persons into the tax loop. While presenting the Rwf1,949.4 billion 2016/17 Budget Proposal to a joint session of Parliament, yesterday, Minister Gatete said the bold (and the expensive) venture is one of the strategies that will help Government streamline tax administration and increase revenue collections. Minister Gatete checks in his briefcase before reading the budget at Parliament. Next fiscal year’s Budget is higher than Rwf1,808.8 billion of the revised budget for this year. It comes into force on July 1. “For us to be able to know the number of taxpayers, we need accurate numbers of what is traded in comparison to production; that cannot only depend on responsible citizens who abide by tax laws. Therefore, if we distribute the machines to all VAT eligible businesses we will be able to capture accurate information of what is traded since the EBMs are linked with the revenue agency network,” he said. Minister Gatete reads the budget at Parliament yesterday. The minister added that the move would also help expand the tax base. “We are going to foot the bill for the machines; and business owners will pay back the money in a small installments once they start using them,” Gatete said. The minister said the machines would be distributed to traders within three months. An EBM costs between Rwf230,000 to Rwf380,000, depending on the model. He noted that the move will equally support government efforts aimed at netting those who dodge or evade taxes through presentation of false financial statements. Lawmakers follow proceedings at parliament. By the end of last year, there were only 9,966 VAT-registered taxpayers using EBMs, a figure that is likely to almost double if all the informal sector VAT eligible businesses start using the machines. This will support the revenue authority to meet its tax collection targets. Key Budget figures While presenting the budget estimates, Gatete said the 2016/17 fiscal year total budget will largely be financed by domestically raised revenues estimated at Rwf1,182.4 billion, which is Rwf133.8 billion higher than Rwf1,048.6 billion for this year’s revised budget. The Budget, that seeks to help the country become more self-reliant, is projected to be supported by 37.6 per cent, about Rwf733 billion, from foreign grants and loans. According to Miniser Gatete, Rwf958,7 billion will fund recurrent expenditures, while Rwf785,3 billion of the budget is development-oriented allocations. On the other hand, the government has kept public net lending at the tune of Rwf108 billion. MP Edouard Bamporiki asks a question during the budget reading at Parliament. The minister said the Budget also seeks to reduce trade deficit, especially by focusing on accelerating the Made-in-Rwanda initiative to spur export volumes and value. It is also expected to finance the completion of ongoing developmental projects. The Budget, that is normally centred around the thematic areas of the country’s development blueprint, EDPRS II, which have been allocated the lions share of the total Budget. At least Rwf1,071.8 billion (55 per cent) of the total budget targeted for EDPRS II thematic areas will go into economic transformation projects, rural development and accountable governance, the minister said. According to Gatete, economic transformation project will be allocated with Rwf517,1 billion, accounting for 27 per cent, while Rural Development will be financed at Rwf256,5 billion or 13 per cent category budget. MP.Nikuze Nura asks a question during the budget reading at parliament yesterday. (All photos by Timothy Kisambira) “Productivity and youth employment in the same category will be allocated with Rwf106 billion, 5 per cent while the remaining Rwf192 billion, accounting for 10 per cent, of the Budget will go to accountable governance,” Minister Gatete told the House composed of Deputies and Senators. Foundational areas, which is the second category of the allocations is expected to spend at least Rwf877,6 billion, which is equivalent to 45 per cent of the total Budget, to support education, health, public accounts, justice and sustainable development. ********************** Lawmakers react Many lawmakers wondered why some projects were not mentioned in the Budget Proposal. MP Theobald Mporanyi, a member of the parliamentary budget committee, was not happy that some projects were not prioritised. “Muhororo Hospital, which was expected to be completed by the end of this financial year, still has over 30 per cent of the works pending; what happened? Also, for the country to develop, we have to build on rural development. When low-income earners get more disposable income, the whole economy will flourish. So, how did government measure allocations at the national level versus district level? The allocations seem to be tilted, with rural development missing out,” he said. Chairperson of the standing Committee on National Budget Constance Mukayuhihe speaks during the budget reading at parliament. Although more discussions will be carried out at the committee level, Gatete assured lawmakers that performance on economic growth is on the positive trajectory compared to other economies globally. “Rwanda has been striving to maintain its growth momentum despite the bullish US Dollar, which has continued to appreciate against other major currencies,” he said. The minister said as one of the measures to stand strong against other currencies, especially for exporters, government has applied for a standby loan facility from IMF, which is estimated at around $200 million (about Rwf150 billion) to support Rwanda Franc. editorial@newtimes.co.rw

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[PHOTOS]: Govt strategy to widen tax base