Burundi MPs pass budget bill with proposed new taxes despite opposition

Thu Jul 31, 2014 9:58am EDT

* Government says bill would address deficit, power shortage

* Tutsi-led coalition partner, Hutu opposition reject bill

* Proposal includes new tax on fuel, sugar, mobile phones

By Patrick Nduwimana

BUJUMBURA, July 31 (Reuters) - Burundi's national assembly has passed a revised budget bill proposing new taxes on essential items despite resistance from a Tutsi-led faction in the government and Hutu opposition legislators, who say it will worsen living conditions.

Under the proposal, wines, liquors, cosmetics, tobacco and mobile phones would pay a $0.25 "new stamp tax", and washed coffee, sugar, flour and mineral water would also have new taxes imposed.

There would also be a new fuel and airport departure tax.

The government argues the measures would help reduce the deficit expected in revenues this year. Burundi's budget for this fiscal year had predicted tax revenues of 633 billion francs ($411 million), but the government expects a shortfall of 44 billion francs.

Finance Minister Tabu Abdallah Manirakiza has said the new taxes would raise funds for new roads and power supplies.

Burundi has suffered a power shortage because of a sharp fall in water reserves in the country's main hydroelectric plant because of a drought.

The country is also trying to wean itself off international donors who provide 50 percent of the country's budget resources.

Only parliament members of the ruling CNDD-FDD party approved the bill late on Wednesday.

MPs from the Tutsi-led UPRONA party, the minority partner in a power-sharing government set up to keep ethnic tensions in check after a 12-year civil war, and legislators from the small Hutu opposition FRODEBU NYAKURI party, rejected the proposal.

UPRONA party and FRODEBU NYAKURI party MPs say the proposed new taxes would worsen conditions for the nearly 10 million people in the impoverished nation.

Burundi was ranked among the top five countries globally in terms of poverty density in a report published by the World Bank in April, with 81 percent of the population living below the poverty line.

"I personally voted 'no' against the government's draft bill, because it raises tax on fuel and other essential products. This situation will seriously affect the majority of Burundians who are already facing poverty," said Jean Minani, the FRODEBU NYAKURI party chairman.

The bill includes a proposed new tax on alcoholic and other drinks made by Brarudi, a brewery in which Heineken owns 59 percent, with the rest owned by the state.

($1 = 1539.9000 Burundi Francs) (Editing by James Macharia and Raissa Kasolowsky)