New Taxes to be introduced in light of Revenue Shortfall

26 Jul 2014
Burundi Receiver of Revenue (OBR)

Burundi’s cabinet will propose new duties on some alcoholic drinks and other products, an airport departure tax and other measures to make up for a shortfall in forecast revenues for 2014, according to a draft bill seen this week. This year’s budget had predicted revenues of 633bn Burundi Francs (US$ 411.04m), but the government now expects to fall short by 44bn francs. Even so, the final figure is likely to exceed 2013 revenues of 559.5bn francs. This year’s shortfall has been blamed on the move to cut corporate taxes to 30% from 35% last year.

The draft bill, seen by Reuters and due to be presented to parliament, has drawn an angry response from activists in the impoverished east African nation. One campaigner called for protests, saying the taxes would hurt the poor most. According to the draft, a new tax will be introduced of 0.21-1.0% on alcoholic and other drinks made by brewery Brarudi, which brews beers and bottles soft drinks. It is 59% owned by Heineken and the rest by the state. Wines, liquors, cosmetics, tobacco and mobile phones will pay a $0.25 “new stamp tax”, while the bill also introduces new taxes on fuel, lubricants, washed coffee, sugar, flour and mineral water.

Passengers departing from Bujumbura international airport will pay a 30 000 franc tax ($19). Importers are set to pay a deposit worth 3 % of the value of imported goods, a sum that will be deducted from their final income tax payment. “We have people in government who cannot justify their wealth. The government should instead impose taxes on wealth of those individuals who steal the taxpayers’ money,” said Gabriel Rufyiri, head of the local anti-corruption body Olucome. “We will call people to take streets and say no to those new taxes, which will worsen the living conditions of the Burundian people,” he told Reuters.

Burundi, which relies heavily on coffee exports, has been trying to boost its earnings, with budget support from donor nations falling steadily. Donors still provide about 50% of budget resources. The government has been increasing revenues through improved collection and crackdown on graft. This month, the revenue authority OBR reported a 10% rise in tax revenues for the first half of 2014 over the same period a year earlier. But it said it was still short of forecasts.

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