KINSHASA (Reuters) - Democratic Republic of Congo has begun to collect at source income taxes which even some of its top politicians were failing to pay, to help combat a deepening fiscal crisis, the budget minister said on Tuesday.
Resource-rich but impoverished Congo has seen income from mineral exports, its primary foreign currency earner, plummet since mid-2008 as demand for its copper and cobalt has dried up due to the global economic downturn.
Amid a growing budget shortfall, the government is under pressure to cut costs and boost tax revenues.
Budget Minister Michel Lokola told Reuters that last month’s decision to tax government salaries at source, rather than rely on employees to pay taxes after receiving their salaries, had already raised roughly $1 million.
“They just weren’t paying. The government ministers we replaced, the MPs, the senators, they didn’t pay,” said Lokola, who entered the government last October in a cabinet shake-up that saw his predecessor Adolphe Muzito named prime minister.
Lokola said the move was partly aimed at setting a good example, adding that Congolese President Joseph Kabila’s government salary was also subject to the measure.
“He is aware of this, and he approves of it ... I don’t see how we can expect the private sector to pay their taxes if we don’t pay ourselves,” he said.
The decision was applauded by residents of Kinshasa, the country’s sprawling riverside capital.
“I think it’s necessary. Everyone used to pay their taxes, but for a while now, people don’t pay anymore,” said one government employee who asked not to be named.
Tax evasion is rampant in Congo and is seen by many as vital to their economic survival.
A convoluted tax system, used by employees of state agencies to help supplement salaries often received months late if at all, has helped make Congo the world’s worst country in which to do business, according to a World Bank report last September.
The study found that medium-sized businesses that fully complied with the demands of state agencies would pay an average of 32 different taxes, theoretically consuming around 230 percent of their profits.
Editing by Daniel Magnowski and Andrew Roche