Proposed increase in domestic revenue to support 2010 budget

Domestic resources for the budget of the fiscal year 2009/10 are projected to increase by Rwf 25 billion, according to a draft revised budget law presented to parliament last week by the Minister of Finance and Economic Planning. John Rwangombwa, the Finance Minister said that further additional revenues will come from the sale of treasury bills that are worth Rwf 7.9 billion and Rwf 17.1 that will be drawn from government deposits in the National Bank of Rwanda. The revised law which the Minister is optimistic should be passed in two weeks’ time, said that the total expenditures were being revised upwards from Rwf 838.0 billion to Rwf 898.9 billion showing an increase of about 60.9 billion, which is the same increase in resources. According to Rwangombwa, the reason for budget review was to acknowledge a number of programs with low implementation rate where some funds would be reallocated. A total amount of 9.9 billion has been identified and reallocated to certain programs that were under budgeted. However, the idea for the revised budget was done in view of maintaining the country’s macro-economic stability and spear heading economic development that is in tandem with the priorities included in the Economic Development and Poverty Reduction Strategy. The revised budgetary estimates also reveal that total tax revenues are projected to increase. Information availed by MINECOFIN indicate that total tax revenue is projected to increase by about Rwf 1.3 billion. This will push total resources originally budgeted from Rwf 838 billion to Rwf 898.9 billion. Sources within Rwanda Revenue Authority, the national tax body, indicate that this increment as factored in the revised estimates is attributed to enhanced collection systems across board. RRA officials said on Friday that a general increment of the Gross Domestic Product (GDP) per capita whose figures are expected to be released next week points to this increased collection. Statistics from MINECOFIN indicate that the GDP per capita has since increased from $236 in 2000 to $492 in 2008. The increment in GDP is also a pointer of the fact that the economy has been on an upward swing which has seen new companies and investments putting up shop in Rwanda. This according to the information availed by RRA brings in additional consumption of taxes. Tax administration has also improved. A decentralized tax system in which the tax man has moved closer to the people has served to bring the previously untaxed into the tax net especially small and micro payers through the new block management system. Consequently a positive trend in collection has been witnessed. From Rwf 328 billion in 2008 the total tax collected jumped to Rwf 362 billion in 2009. It is expected that the collection could surpass the Rwf 400 billion mark this year. RRA sources say that the enhanced collection has netted in Kigali alone over 2,000 new tax payers within a period of 6 months. However according to MINECOFIN though overall tax revenue is projected to increase, the non tax revenues are expected to fall by Rwf 17.8 billion. Consequently the net reduction in total domestic revenues is projected at Rwf 16.5 billion. Ends