Legislators, yesterday, punched holes in districts tax collection strategies, saying Rwanda Revenue Authority and local governments failed to uphold agreed budgetary discipline and laws governing finances in the execution of the 2015/16 fiscal year budget.
They were analyzing allocations in the 2016/17 Budget Framework Paper which was adopted by both chambers of parliament last week.
The Budget Framework Paper estimates Rwf1,949.4 billion will be spent next financial year, if it is approved by the parliament in June, up, from Rwf1,808.8 billion revised current budget.
While government attributes the increment from performance of domestic revenues collections, legislators have expressed skepticism on the dwindling revenues, mostly from district tax collections after local government’ revised targets downward.
Initially, Rwanda Revenue Authority had projected to collect Rwf55 billion in the current fiscal year from districts’ taxes, but revised the figure downwards to Rwf45 billion after realising the target would not be realised.
This, according to legislators, amounts to budgetary indiscipline, since provisions relating to modification and or adjustments of the national budget as stipulated in the Organic Budget Law were not observed and neither comprehensive consultation with respective institutions were made.
According to Juvenal Nkusi, the chairperson of the Parliamentary Public Accounts Committee, initially the targets were set bearing in mind a land law that would be amended to allow districts collect more money from land taxes at the average increment rate of 1 to 2 per cent, which did not happen, therefore pushing districts to revise the projections downward.
“Unilaterally, they decided, through Rwanda Revenue Authority and districts meetings, to align targets slightly above last year’s targets, but the reasons are not convincing, they should have engaged district councils fully and the parliament should have been involved,” he said.
“On the other hand, there have been some changes in tax collections which were effected while public awareness was still relatively low and, as a result, some of the taxes were not collected, fines were not equally charged, and even those (fines) collected were not posted.”
Nkusi stressed that, despite the change; performance contracts will be evaluated against the initial targets.
Though, outreach reports by the same committee have shown 90 per cent of the targets were realised against the newly set targets which won’t be considered.
MP Constance Mukayuhi, the chairperson of the parliamentary committee in charge of Budget and National Patrimony, picked no issues in downgrading targets but faulted the concerned authorities for making little or no efforts to make extensive consultations.
“The organic budget law says that any change amounting to 20 per cent in addition and or deduction on the actual approved budget, members of parliament need to be involved but we have agreed the assessment will be against the initial targets,” she said.
Richard Tusabe, the Rwanda Revenue Authority Commissioner General, acknowledged the faults, but noted there was poor coordination and unrealistic ambitions in earlier targets.
“We had thought that amendments on the land law would have been completed but along the way we decided to change the targets [after the law was not amended]. However, there was also an issue of being over ambitious because we realised the projected amendments would go hand in hand with city development master plans,” he said.
According to Tusabe, the changes in the law would have seen some areas demarcated and earmarked as urban regions which would require dwellers to pay high land tax fees even when developmental activities were far away from a noticeable stage.
At least seven districts, according to Tusabe, have so far been in negative tax growth; only 12 districts seem to be on the right track, while others have recorded special cases in terms of budget execution that goes hand in hand with annual performance contract.
Dr Uzziel Ndagijimana, the State Minister in charge of Economic Planning, told lawmakers that government envisages closer monitoring strategies on budget absorption and execution to avoid such behaviors in the future.
“If there are changes against provisions of the earlier accepted budget, they should have been communicated, for example in case of repetitive national disasters, changes should follow regulations and laws in place,” he said.
However, Minister Ndagijimana added that failure to meet targets shouldn’t be regarded as a crime in itself as a number of factors might be responsible but it should be reflected in the budget timeline to ease absorption capacity.