Tuesday, June 2, 2009

Rwanda consumption drops as tax revenues dip

Written by BOSCO HITIMANA - Tuesday, 19 May 2009 = KIGALI, RWANDA

The Rwanda Revenue Authority (RRA) has announced shrinkage of Rwandans’ consumption rate. The authority last week further reported that Value Added Tax (VAT) and Excise Duty collections registered shocking shortfalls missing targets for March this year.

“Much as we achieved our revenue targets for the first quarter, we did realize a couple of loopholes in terms of our collections especially in relation to VAT which has been our number one tax earner and our excise consumption taxes,” RRA Commissioner General, Ms. Mary Baine said.

Baine was announcing revenue collections of the first quarter of 2009 at RRA headquarters last Wednesday.

VAT collections were Rwf8.6 billion (around $15.2 million) against the targeted Rwf10.2 billion ($18 million) missing Rwf1.6 billion ($2.9 million) which is equivalent to a shortfall of 15.6%.

Excise collections reached Rwf2.3 billion (around $4 million) against the target of Rwf3.5 billion ($6.2 million) missing Rwf1.2 billion ($2.1 million) which represents a shortfall of 34.2%.

“There is clearly a lower consumption rate as opposed to our projections for the period,” Baine said.

She blamed underperformance of taxes on goods and services on declining sales due to less money on the market as a result of the global financial crisis and the annual general inflation which fell by 2.37% to 17.08% in March from 19.45% in February.

Consumption of petrol, beer, airtime, wine and liquors declined hence dragging down excise tax targets and “this of course hindered the performance of taxes on goods and services,”she said.

Despite poor performances of the two major taxes, other revenue sources especially, customs, and non-tax revenues performed outstandingly and covered the loss.

Collections from petrol and reinforced audits helped to bridge the gap and contributed much to the total revenues of the first quarter of 2009.

The revenue body surpassed the total revenue target by Rwf7.7 billion (around $13.6 million) with 108.8% increment, collecting Rwf95.9 billion ($169.4 million) against the target of Rwf88.2 billion ($155.8 million) in the first three months of 2009.

Fiscal revenues amounted to Rwf94 billion ($166 million) surpassing the target of Rwf86.3 billion ($152.5 million) by 108.8%.

Non-fiscal revenues that include fees levied on passports, identity cards, licences and fines, surpassed the target by 108.2%, contributing Rwf1.9 billion ($3.4 million) against a target of Rwf1.7 billion ($3 million).

The overall performance was attributed to the performance of the economy which grew at 11.2% in 2008.