“The tax authority in Burundi – the Office Burundais des Recettes (OBR) – has more than doubled tax revenues in three years. This is a remarkable achievement for an organisation that was branded by Transparency International as the most corrupt institution in East Africa in 2010”, said Kieran Holmes, Commissioner General of the OBR, speaking at an event in London hosted by Africa Research Institute.
“There is a pressing need to increase revenue collected from domestic sources in Burundi, as donor assistance is drying up and the government is looking to expand service provision and infrastructural development”, added Holmes.
The event marked the publication of Africa Research Institute’s latest report “For State and Citizen: Reforming revenue administration, in Burundi”, in which OBR’s senior management describe in detail how tax collection and administration have been reformed in one of Africa’s poorest nations.
Kieran Holmes was joined on the panel by Domitien Ndihokubwayo, Deputy Commissioner General and Commissioner of Customs and Excise at the OBR, Chantal Ruvakubusa, Commissioner of Domestic Taxes and Non-Fiscal Revenues at the OBR, and Professor Mick Moore, Chief Executive of the International Centre for Tax and Development at the University of Sussex.
“In a rapidly changing world, Burundi needs an efficient tax authority and customs procedures in order to meaningfully benefit from regional and international trade”, noted Domitien Ndihokubwayo. “Transparency and integrity in tax collection are essential to promote economic growth that will benefit the entire population in Burundi”, added Ndihokubwayo.
Tax expert Mick Moore said that it “warmed his heart to participate in a discussion about taxing Africa”. He also praised Burundi for leading tax reform efforts in francophone Africa. He noted that “African countries have a respectable record of reforming and adapting their tax institutions. In general, this positive situation applies more to anglophone countries than francophone ones. Burundi, however, is an exception to this trend”.
In Burundi, the prospects for improving tax administration could not have been more inauspicious. By 2009, following the cessation of a civil war that claimed more than 200,000 lives, Burundi’s GDP per capita was the lowest in the world at US$150. Four-fifths of the population subsisted below the US$1 income per day poverty line. In 2012, tax revenues were 75% higher than in 2009 – a 25% increase in real terms. The contribution of tax to GDP had risen from 13.8% in 2009 to 16.7%.
Notes to editors:
Africa Research Institute is an independent, non-partisan think-tank based in London. Our mission is to draw attention to ideas and initiatives that have worked in Africa, and identify new ideas where needed.
For State and Citizen: Reforming revenue administration, in Burundi can be downloaded from the Africa Research Institute website: http://www.africaresearchinstitute.org/publications/policy-voices/taxation-in-burundi/
About the publication
Tax is high on the agenda in Africa. At an international level, advocacy groups and the G8 have called for greater efforts to counter tax evasion and avoidance by multinational companies. But in many countries in sub-Saharan Africa, a similar – and arguably even more pressing – campaign is being waged to improve the capacity of the state to collect domestic revenues.
In Burundi, the prospects for improving tax administration could not have been more inauspicious. By 2009, following the cessation of a civil war that claimed more than 200,000 lives, Burundi’s GDP per capita was the lowest in the world at US$150. Four-fifths of the population subsisted below the US$1 income per day poverty line. The Transparency International East African Bribery Index listed Burundi as the most corrupt country in the region. The country’s tax department was named as the most corrupt institution.
Despite the signally inhibitive outlook, the government implemented a number of measures to improve financial management. These included the creation of a new semi-autonomous revenue authority – the Office Burundais des Recettes (OBR). In 2012, tax revenues were 75% higher than in 2009 – a 25% increase in real terms. The contribution of tax to GDP had risen from 13.8% in 2009 to 16.7%.
In this Policy Voice, the OBR’s senior management describe in detail how tax collection and administration has been reformed in one of Africa’s poorest nations. Their account highlights the actions taken to reduce corruption, improve services, implement legislative reforms and widen the tax base.
The authors are candid about the difficulties confronting the OBR. Among other things, tax exemptions remain too high and the costs of taxing much of the informal economy outweigh any financial benefit. The establishment, and continued success, of an efficient revenue authority is dependent on a favourable political, business and legislative backdrop.
Tax reform is about more than simply raising revenues for central government. Higher revenue will be essential for the health of the public purse. However, the judicious deployment of public funds will be critical for building a viable democracy in Burundi.