Efficiency in revenue collection at the grassroots could be boosted after Rwanda Revenue Authority (RRA) took over the work from local governments.
According to a draft agreement, RRA has been tasked to collect all revenues from the districts and remit percentages back to local authorities.
Amb. Claver Gatete, the minister for finance, said the move will not only enhance efficiency in tax collections but also reduce on the cost of collecting revenues at district level.
“Local governments have on most occasions been hiring tax collectors to collect taxes on behalf of Rwanda Revenue Authority due to capacity constraints,” Gatete told The New Times last week.
“But now that RRA has built its capacity in terms of expertise, skills and knowledge, they will fully take over the job of collecting taxes from local government, the whole idea is to have the job of tax collection done properly and efficiently by people who understand the sector well.”
He said RRA is already collecting taxes as prescribed by the new agreement and that the parties will sign a memorandum of understanding to seal the deal soon.
The minister said government has already contacted all stakeholders, including mayors, about the new arrangements.
The country’s actual domestic revenues stood at 16 per cent of GDP (the value of all goods and services) during fiscal year 2012/2013. Tax revenues accounted for 14.2 per cent while the value of non tax revenue was 1.8 per cent of GDP, according to World Bank Rwanda economic update report, 2014.
Drocelle Mukashyaka, the RRA deputy commissioner for taxpayer services department, said the tax collection body has the capacity to do the job as required.
“Rwanda Revenue Authority has invested much in terms of capacity building, knowledge and skills in a bid to improve efficiency and accuracy as far as revenue collections is concerned,” she said.
Mukashyaka said RRA is currently working with all stakeholders to ensure that revenue collections are done more efficiently and transparently while widening the country’s tax base.
Rulindo mayor Justus Kangwagye, who is also the chairperson of the Rwanda Association of Local Government Authorities, told this paper that the deal provides yet another great opportunity for tax collectors at the district level to learn from the expertise that will come with RRA.
“The deal does not take away taxes from us but rather provides a healthy partnership between local government and RRA that will reduce the cost of collecting taxes and build on skills and capacity of collecting taxes at the district level. The idea of decentralising services is to benefit every Rwandan,” he said.
Prosper Mulindwa, the Rulindo vice mayor in charge of economic affairs, said at about Rwf510 million, the domestic taxes constitute about five to six per cent of the district’s budget.
He cited trade licences, rental tax and property tax among those to be collected by RRA.
The arrangement started effective March.
RRA surpassed its revenue collection target by Rwf 22 billion for the second year in a row during the fiscal year 2012/2013, remitting Rwf675 billion to the national treasury.
With improved revenue collections, the country can now finance more than half of the budget using local resources. About 60.2 per cent of the 2013/14 Financial Year Budget is being financed by domestic revenue.