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The Gambian Minister of Finance and Economic Affairs Abdou Kolley on Friday night presented his revenue and expenditure proposals to the Gambian parliament in Banjul of $218 million. Delivering his maiden budget speech to parliament the minister made a broad survey of the international and domestic economy, reviewed the performance of the domestic economy and made proposals for raising revenue to meet projected recurrent and capital expenditure.

The minister told deputees that the proposed budget for 2010 is based on a sound macroeconomic policy framework to support growth, maintain low inflation and improve debt sustainability. According to him, the budget represents a decisive step by the government to tackle the country’s heavy debt burden particularly interest payments on domestic debt. He said the aim is to reduce debt from treasury bills and create savings.

The minister then said total revenue and grants would be increased from 4582 billion dalasi (approx. $183 million) in 2009 to 5474 billion (approx. $218 million) in 2010 with the additional funds coming from increases in tax revenue, project grants and budget support. He said projected tax revenue represents 18.58% of GDP. In revenue terms also, the overall increase in grants is being expected from the increases in project disbursements and additional HIPC and EU budget support. Also expected to increase in 2010 are the figures for expenditure and net lending.

He added that interest payments on debt will decline while other current expenditures including externally financed ones and personnel emoluments are expected to increase. He also said the budget will be in deficit by 1.39 percent of GDP which will be fully financed by domestic and external resources including proceeds from capital revenue. Reaffirming the government’a commitment to a comprehensive tax reform in the coming years, he said corporate tax would be gradually reduced starting with a 2 percent reduction to 33 percent for 2010. Turnover tax will also be reduced by 0.5 percent. But the minister warned that no effort will be spared to ensure strict enforcement of and compliance with the tax laws.

He added that following the compilation of a nationwide rental property survey, the revenue authority will embark on a more vigorous collection of taxes on rental properties. The minister recalled that in 2008 the government zero rated the sales tax on rice as a policy measure to minimise the impact of the food crisis, forgoing significant revenues. With that crisis behind us now and to boost local rice production, the sales tax will be restored to the 5% level.

 He said excise tax has also been increased on alcohol products (wines, beer and spirits) and unmanufactured tobacco by up to one third in some cases. Another area attracting tax increases is in respect of vehicle licenses, license plates, road tax, which he said had not been increased in the last 10 to 15 years.

The major change he said would be to transfer the payments to the revenue authority from the police who will henceforth only look after the technical aspects. "This is to enhance revenue administration," the minister stated. The minister said the personal income tax structure will be reviewed to bring it in line with prevailing economic conditions and make it more progressive, fairer and revenue productive. Expected revenue yield from these measures and from HIPC and EU budget support he said will bring total budget outlay in 2010 to $218 million.