Early this week, Rwanda Revenue Authority (RRA) announced that it had surpassed its revenue collection target by Rwf30 Billion during in the last fiscal year, collecting over Rwf 1.4 Trillion in taxes.
That was about 54 percent of the whole budget and it should have been happily welcomed by the government’s planners as it sets its eyes firmly on weaning itself off foreign aid.
But despite RRA’s positive performance it is still faced with very serious problems; smuggling and tax evasion.
Just last week, it broke a big liquor smuggling ring that had managed to slip away with billions of francs in taxes. They had even managed to get their hands on RRA import stamps to stick on high-end smuggled liquor to show that they had paid taxes. It was quite an elaborate operation that was about to put bonafide liquor importers out of business.
There are strict laws in place but smugglers always have ways of circumventing them. Impounding smuggled goods and the vehicles carrying them and auctioning them has always been the norm, but that did not seem to put a dent in the practice. But now it could be different.
The East African Community decided to come up with a common front to fight smuggling. On top of adopting Rwanda’s impound-and-auction policy, a $5000 fine and jail time are also on the menu.
Before, smugglers only risked their goods and vehicles being impounded and lived again to try another day. Now with the possibility of a hefty fine and jail term, they will have to think twice before going back to their old habits.
But there is just one catch that RRA will have to tread carefully, smuggler might not necessarily be the owner of the vehicle in question, he could have borrowed it or rented it. Before auctioning someone’s vehicle, due diligence needs to be exercised.