Yesterday Rwanda Revenue Authority (RRA) celebrated its tenth anniversary.
This year the domestic revenue component of the Budget overtook the external grants component predominantly thanks to wider taxation. Tax revenues have increased from Frw74 billion in 2000 to Frw111 billion in 2003 to an estimated Frw275 billion in 2008. The increase is remarkable.
But the theme of RRA celebrations, ‘Be a compliant tax payer, build your nation’, pays homage to the fact that more people need to be paying taxes.
By 2012 Rwanda hopes donor support will make up only 11 per cent of the budget. The key to meeting such targets lies in Rwanda’s capacity to tax its people.
And this is no easy feat. All developing countries face formidable challenges when they attempt to establish efficient tax systems.
Rwanda is no exception. The vast majority of workers are employed in agriculture and are seldom paid a regular, fixed wage, their earnings therefore fluctuate, and many are paid in cash, ‘off the books’. The base for an income tax is therefore hard to calculate.
The informal structure of the economy makes it particularly difficult to generate reliable statistics. This lack of data prevents policymakers from assessing the potential impact of major changes to the tax system.
Key then if Rwanda is to achieve its ambitious budget projections, is an efficient tax administration made up of well-educated and well-trained staff and computerised operations.
The professionalisation of RRA was a significant achievement and its track record thus far looks good. Unlike its counterparts in other African countries, the Rwandan tax authority is efficient, bribery is rare and severely punished, and it is extremely difficult to dodge taxes.
So as RRA celebrate its tenth birthday and as it asks us to be compliant tax payers, we in turn ask them to keep up the good work. Together we make this country’s dreams a reality.