Increase of taxes on consumables in the next fiscal year worries public

m_Increase of taxes on consumables in the

The government budget for the fiscal year 2014/15 is expected to be read in June but government anticipates having an increase in taxes on a good number of goods phone recharge cards.

Residents in Kigali, most of them small business operators have expressed fears that the increase in the taxes may increase the cost of living.

“We would like government to consider reduced taxes on consumable goods. The cost of living is becoming very high and yet the incomes and salaries do not increase with the economy” one trader Josephine Umutoni says.

Though economic growth is expected in 2014 and the medium term; apparently, Rwanda faced a slowdown in economic performance of 2013 on account of adverse weather conditions that affected agricultural production, and subsequent increase in the cost of living.

Rwanda’s development largely depends on taxation for its development and President Paul Kagame has always encouraged Rwandans to pay taxes as a way of attaining self reliance.

currently Rwanda depends on donors for about 40 per cent of its Budget, the National Budget Framework puts overall total grants including loans at 38.1 per cent of the total 2014/15 Budget (Rwf 667.6 billion).

Total domestic revenue collections are estimated at Rwf986 billion, with Rwf906.8 billion expected to come from tax revenue, while Rwf79.3 billion will be derived from non-tax revenue including reimbursements from Rwanda’s peacekeeping missions abroad.

Fiscal budget projections

The 2014/15 budget is expected to close the fiscal year with an overall cash deficit of 177.2 billion (3.1 percent of GDP) as against RWF 271.2 billion (5.3 percent of GDP) in 2013/14. To cater for the deficit government is expected to externally borrow Rwf 106.7 billion while the remaining Rwf 69.6 billion will be covered through domestic borrowing.

The 2014/15 expenditure projections are based on the four thematic areas of the EDPRS 2 which will take Rwf915 billion representing 52% of the entire budget. Economic transformation which seeks an ambitious, prioritized and coherent cross-sectoral strategy to sustain rapid growth will absorb Rwf 438.9 billion, equivalent to 25% of the total resources.

The inflation that slightly declined from 3.7 % at the end December 2013 to 3.4 % at the end of March 2014 is expected to remain low and not exceed 5 % by end 2014 and contained at 5 % in the medium term.

Members of Parliament have been tasked to review the budget projections and MP Constance Mukayuhi Rwaka, the chairperson of the parliamentary Committee on National Budget says that one of the tasks is to assess measures that will ensure that the fiscal year’s targets are met.

 

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About the author

Olive Ndaka is the Junior Editor for RwandaEye. An investor and young entrepreneur, she is a quick learner and has contributed many articles for RwandaEye in Kinyarwanda.

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