Graft crackdown to lift Burundian tax revenue 13 pct this year

BUJUMBURA (Reuters) - Burundi expects to increase its tax revenue this year by 13 percent to 633 billion francs ($408 million) due to more efficient tax collecting and a crackdown on graft, its outgoing tax chief said.

Kieran Holmes, who was seconded by a regional trade lobby funded by international donors in 2010 to implement tax reforms, said the extra money came from the newly set up tax agency's (OBR) work reducing graft.

"We have managed to get a 100 percent compliance from the largest tax payers, and 83 percent compliance from medium tax payers,” Holmes told Reuters in an interview.

"We have swapped corruption for tax," he said, referring to the low level of compliance when he took over.

Burundi collected 363 billion francs in tax in 2010.

The land-locked nation emerged from a debilitating civil war in 2005 and has been consistently ranked the most corrupt in the five-nation East African Community common market in recent years by anti-graft campaigners.

OBR was set up to help Burundi cut reliance on donor funding, which makes up half of its budget, and to help it raise economic growth rate to help lift the bulk of its 10 million people out of poverty.

Economic expansion in the country that relies on farm exports including tea and coffee has remained below 4 percent every year during the last decade.

"Burundi needs more than 4 percent in GDP growth, the challenge is to give confidence to investors," Holmes said.

He said the main obstacle to that was a rampant lack of respect for the rule of law.

"Whenever there is an agreement signed with the government, it must be fully respected," said Holmes, who is from Ireland.

African lenders such as Kenya's KCB and telecom operators are among foreign investors who have been pitching for business in Burundi in recent years.

A lack of enough time to complete his plans for the tax service and failure to upgrade its information technology system, to allow taxpayers settle their dues on mobile phones, were Holmes' biggest regrets as he leaves the job, he said.

By Patrick Nduwimana

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