Concerns raised by Rwandans regarding the recent increase in tax on immovable property must be addressed fast to ensure that the gains made in having a society that believes in the advantages of paying taxes are not compromised.
This is according to the Chairperson of Transparency International Rwanda, Marie Immaculée Ingabire.
She said this while appearing on a panel to discuss the changes made in the property law that was passed in August 2018, raising the tax from between Rwf30 and Rwf80 per square metre to between zero and Rwf300.
The same law states that any undeveloped parcel of land is subject to the additional tax of 100 per cent to the tax rate referred to in its article 18.
The law determines the size of a standard plot of 300 square meters, meaning that it is 20 metres in length to 15 metres wide.
The tax increases by 50 per cent for each extra square metre to such standard plot.
However, for land in use for agriculture, livestock or forestry, if the taxpayer owns less than two hectares, it is exempted from tax, as it was also the case in the previous law.
Commenting on the rise, Ingabire said that the fact that the tax is more than triple what people were paying before, makes paying it prohibitive for many especially low income earners.
She said that there is still a big number of people who were having difficulties paying when the tax was still at Rwf80 per square metre and expressed her concerns over how this may affect the attitude towards taxation.
"There is a saying that many or high taxes spoil taxation. What this means is that if you ask people for taxes that are within their means, you will encourage more people to honour their duties. It is always better to increase gradually," she said.
Member of Parliament Frank Habineza agreed. He said that on October 30, 2019 he filed a private members bill in parliament seeking a revamp of this law.
However, he was challenged by the government to provide alternative solutions regarding how the government would make the billions it has been making from this exercise.
He said that his proposal was that if the tax is to be increased, it should at least be put at Rwf100 not Rwf300 as proposed by the Government.
He said that his proposal came as a result of feedback from the general population countrywide.
He said that the general consensus is that while Rwandans understand the value of paying taxes, the challenge is in how high it is in relation to their income and also the timing.
"The timing of the implementation is also problematic. The general population has been struggling with the effects of Covid-19. Businesses, even the ones we considered successful, are struggling. Others have closed. It will take a while before people get back on their feet," he said.
During a press conference held on Monday, December 21, President Paul Kagame asked the Minister for Finance Uzziel Ndagijimana to explain the issue, and the latter said that government had heard the pleas from the masses and started the process to review the decision.
He said that the review is being done by his ministry in collaboration with that of local government and the local leadership entities.
"We are making a comprehensive analysis to study these challenges but in the meantime, we have moved to ease the burden of property tax payers through extending the deadline of the payments to the end of March. They can between now and then pay in instalments," he said.
Payment of fines
The Deputy Commissioner for Regional and Centralised Tax, Ernest Karasira, told The New Times that delays to pay property tax attracts fines.
He explained that those who do not abide by the deadline are in two categories.
The first one is "late payers": These are those who declared on time but didn't pay property tax on time. These ones pay fines equalling to 10 per cent of the total amount of taxes they owed.
Should they continue to delay, they are required to pay additional fines of 1.5 per cent every month.
However, that 10 per cent is not applied every month and never exceeds Rwf100, 000 no matter the amount owed in taxes.
The second category are "non-filers": Those that didn't declare on time and, of course, didn't pay taxes. For this category, besides the fines mentioned above (10 per cent, 1.5 per cent), they also pay an additional fine of 40 percent of taxes that they were eligible to pay.