2019/2020 Budget: How govt will mobilise more resources domestically

The 2019/2020 budget like those before it shows significant effort to step up self-reliance and rely less on donor donation to fund the country’s development and recurrent expenditures.

The Rwf2.8 trillion budget that was presented by Finance Minister Uzziel Ndagijimana on Thursday, will be seeking domestic resources worth Rwf1,963.8 billion, which represents 68.3 per cent up from about 67 per cent in the current budget.

Out of those resources, tax revenue collections are estimated at Rwf1,535.8 billion, accounting for 53.4 per cent of the total budget.

The remainder of the budget will be funded through external sources worth Rwf906.7 billion, including grants worth Rwf409.8 billion (14.2 per cent) and loans worth Rwf497.0 billion (17.3 per cent).

The domestic revenue mobilisation and self-reliance ambitions will among other things rely on improved domestic revenue mobilization capacities and efficiency.

Rather than increase tax burden on the current tax payers, the budget will seek to expand the tax bracket to include aspects previously overlooked such as the informal sector.

The proposed budget also seeks to raise funds through domestic borrowing which also gives Rwandans a chance to invest in the development process.

Rwanda Revenue Authority Commissioner General Pascal Ruganintwali noted that among aspects that will drive up domestic revenue mobilisation is easing the tax compliance process.

Through digitisation of tax systems and processes, Ruganintwali said that the cost of tax collection continues to reduce as well as cost of compliance for the general public.

It’s by efficiency as opposed to increased tax burden that Rwanda can continue to sustainable increase domestic funding for the budget without overwhelming a section of the population. This will see the electronic billing machines used by all traders as opposed to previously when they were used by Value Added Tax payers only.

“We are also going to be doing a lot tax education  whereby we will ensure that all citizens know the processes, procedures  and avenues to pay taxes as well as benefits,” he said.

Tax enforcement measures will also be rolled out to ensure that previous defaulters are given provision to pay the arrears in installments.

Chief Economist of The Central Bank, Prof Thomas Kigabo said that beyond taxes, domestic borrowing which is expected to also raise a section of the budget among other things gives Rwandans a chance to investment in the country.

He said that domestic borrowing is ideal in that it makes use of the growth which has been made over the previous years, increasing the disposable incomes in the country.