Rwanda: Supreme Court Invalidates Article 19 of Property Tax Law

29 November 2019

The Supreme Court Friday declared that article 19 of the law determining the sources of revenue and property in decentralised entities – also known as property tax law – is no longer valid.

A lawsuit had been filed by lawyer Edward Murangwa who was contesting some articles of the aforementioned law.

The court stated that while Murangwa's petition was partly valid, there is no justification that the contested law was in its entirety in contravention of fundamental human rights to land and other private property which are enshrined in articles 34, and 35 of the Constitution as he claimed.

During the ruling by a five-judge bench headed by Chief Justice, Prof. Sam Rugege, Murangwa was represented by two lawyers; Vedaste Bahati, and Jean Marie Vianney Rugemintwaza. The government was represented by  Senior State Attorney Fiat Cyubahiro.

The articles that Murangwa challenged set an additional 50 percent tax on land in excess of the standard size of a plot (300 square meters). However, the same article provides that such additional tax rate does not apply to land acquired before the commencement of this Law – because it is not retroactive.

Reasons that Supreme Court put forward on why it nullified article 19 include that it sets an additional tax of 50 percent on a plot which the owner legitimately got after the law was enacted, not before its enactment.

The Court also ruled that article 20 which charges an additional 100 per cent tax on an undeveloped plot was not in contradiction with the constitution. In the two previous hearings, the appellant had indicated that the provision of that article was against human rights on land ownership because the land would be taken away from the owner once he/she is not able to pay outstanding taxes accrued over time.

The University of Rwanda’s school of law which had joined the case as one of the five amici curiae (Friends of the Court) concurred with him in that that the provision would also result in a hike in rent given that 83 percent of people residing in cities pay rent for accommodation.

“Imposing a 100 per cent additional tax applies to land when the owner who does not use it for what it was meant for. So, the reason given by the representative of the government in this case that this provision was intended to curb speculation is valid,” Prof. Rugege said. However, the Supreme Court recommended that article 20 should stipulate when a plot should be described as undeveloped and to consider grounded reasons why a plot was not developed.

On the provision of the article 16 of the same law which charges a higher tax rate on residential houses which is double that on commercial buildings, and 10 times more than that of industrial buildings, the Supreme Court said it was in line with the government’s tax collection policy. It said that the reason provided by the government’s representative was that the arrangement seeks to support investments in the commercial and industrial sector was valid.

However, it recommended that it would be better if the government carefully examines factors that might hinder the implementation of article 16. Such hindrances include assessing whether the 1 percent tax rate on residential houses was high, and residential houses that children build their parents in recognition for their support in raising them.

After the verdict, both parties in the case said they were satisfied with the Supreme Court's decision.

“I am happy with the Supreme Court’s decision. Having the Supreme Court remove a flawed article from the law, and give recommendations on how other articles in question can be improved to benefit the community is a laudable action. It shows that our justice sector has made tremendous progress,” Murangwa told journalists.

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