2011/12 budget to tackle tax evasion

Government will take new measures aimed at improving tax compliance and efficient tax collection in the fiscal year 2011/12. The new measures to be announced during next month’s budget reading are expected to facilitate the Treasury to arrive at a projected one trillion national budget and boost its efforts towards a self-sustaining budget. According to the budget framework presented to Parliament last week, domestic revenues are expected to slightly increase by 0.2 of GDP to Rwf5.38 billion next fiscal year, up from Rwf4. 4.71 in the year 2010/11. “We are happy that we increased our domestic resources, the bigger the resources we get, the better chances we have to implement our programmes and even the target we have as middle income country requires more resources,” Finance Minister, John Rwangombwa, said during his budget framework presentation to the lawmakers. He added that Rwanda is increasing development budget, which means increase in economic base.However, some members of the Parliament raised the concern about many Rwandans or traders who don’t pay Value Added Tax (VAT) on their products. “There should be measures to bring their contribution in the economic growth, I tried (to survey) about three shops but some had no receipts while others excluded VAT,” said Honerable Agnes Mukazibera. The overall budget objective this year, is to reduce the budget deficit to two percent from 4.4 percent of growth in 2010/2011 financial year. “The aim is still to bring the deficit down far more gradually, so even the risk we say in the future of cutting aid, we can only have problems if relying on aid to implement recurrent budget and so far the balance is good,” Rwangombwa emphasised. Gerald Mukubu, the Director for Taxpayer Services Department at the Rwanda Revenue Authority (RRA) told Business Times in an interview that his institution intends to launch a massive campaign to crackdown tax defaulters. The countrywide campaign targets to broaden the tax base, seal loopholes, name and shame fraudulent taxpayers, he said in an interview. A task team will include a door-to-door drive that will focus on the formal sector, compare picture of all businesses (importations) at customs with domestic declaration because it was discovered that some do not declare. The campaign will be followed by a study to determine registered VAT taxpayers and non-registered. Ends