Revenue collections up

........as tax net widens to bridge gaps arising from reduced fuel prices Revenue collections have shot up by 23.8 percent to Rwf 476.9 billion this year compared to Rwf385.2 billion last year , the Rwanda Revenue Authority has announced. The increment is partly attributed to a surge in imports and taxes levied on imports, which will help cushion against revenues lost as a result of cutting down on taxes on fuel. Value Added Tax (VAT) collections rose by 5.2 percent to Rwf 141.5 billion largely due to tax collections centred around the increasing import bill witnessed by the economy during the period under review. Collections from Pay As You Earn (PAYE) brought in Rwf 113 billion while excise duty collections stood at Rwf 85.8 billion. “We are happy for the changes in terms of tax compliance. While we still see a big gap in VAT collections, I must add that PAYE collection has been good because it is deducted at source,” acting Commissioner General at RRA Richard Tushabe said. VAT efficiency and collections suffer since proceeds depend on determining the correct sales which is a challenging effort because the system is based on self assessment by the tax payer. In such a situation, there is room for loopholes thereby reducing chances of collecting the right amount of taxes. This year, government projects total domestic revenue collections to reach Rwf 529.4 billion. “Reducing budget dependency on external sources is a process that is on going. I am optimistic that in the next five years, Rwanda’s internal resources will contribute up to 60 percent of the national budget,” Tushabe emphasized. According to the budget paper for the fiscal year 2011/2012 presented to parliament, tax revenues is expected to contribute Rwf 501.4 billion while non tax revenue collections have been estimated at Rwf 28 billion. In the same budget paper, government decided to cut down on fuel taxes by Rwf100 per litre for both petrol and gasoil to curb inflationary pressures. The decision was taken after government’s concern about the rising domestic food prices especially in urban areas. Tushabe said that a total of Rwf14 billion would be tax losses arising from the move to reduce fuel prices but the figure has since been abridged to Rwf 9 billion. “There is a gap of Rwf 9 billion but it is justified because fuel prices would have a wider negative impact on Rwandans and on the entire economy,” Tushabe said, while briefing journalists on the RRA’s fiscal year performance. In order to cover for the shortfall arising out of the tax loss from fuel price reductions , RRA says that new measures such as use of electronic tax device software installations at collection sources will be undertaken in order to provide the tax body with accurate VAT figures on the traded goods by tax payers. This new move is expected to raise Rwf1 billion. The other measure meant to boost collections is the introduction of a new gaming law which that will generate over Rwf1 billion. Ends

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Revenue collections up