The Social Democratic Party (PSD) is pushing for an increase of the tax-free income cap so that anyone who earns up to Rwf100,000 a month does not pay tax in line with improving low-income earners’ welfare. This is one of the proposals in the party’s manifesto for the July 2024 parliamentary elections where it fielded 59 candidates.

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Currently, people who earn up to Rwf60,000 in monthly income are not taxed in Rwanda, according to an income tax law enacted in 2022.

Commenting on the need to raise the tax-free income to that of Rwf100,000 a month, PSD Secretary-General Jean-Chrysostome Ngabitsinze told journalists at the party’s electoral campaign rally in Musanze District, on June 29, that it would help such people deal with the increasing prices of goods and services on the market.

Party officials note that they appreciate having seen their proposal in the 2018 elections, to raise the non-taxable monthly income cap to Rwf60,000 up from Rwf30,000, was adopted under the current law.

"But when you look at our economy and a person’s purchasing power, you realize that when you tax one who earns Rwf100,000 a month, it is a challenge for him or her,” he said.

"Raising the non-taxable income cap can help low-income earners increase their purchases, pay school fees for their children, and community-based health insurance [Mutuelle de Sante],” he observed.

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Under the existing law, workers who earn Rwf60,000 to Rwf100,000 are taxed at the rate of 10 per cent, while those who earn Rwf100,000 to Rwf200,000 are taxed at a rate of 20 per cent. A 30 per cent rate is levied on people who earn more than Rwf200,000.

Josephine Mukandayisenga, a Musanze District resident, said that given the rising cost of living, exempting Rwf100,000 income from tax would be a laudable move.

"Such low-income earners should not be taxed because the money they get is meant for meeting their basic needs,” she said, pointing out that the amount they can save through a tax waiver can support their livelihoods.

Meanwhile, Ngabitsinze underscored the need to advocate for support to people who do businesses, especially in secondary cities such as Musanze, and farmers through low interest loans in order to grow their activities.

Apart from Musanze, PSD also held campaigns in Rubavu, Nyanza, and Nyagatare districts, on June 29.

Among other pledges in PDS’ manifesto, there is advocating for cutting interest rates charged on agriculture loans to 10 per cent.

Overall, interest rates on bank loans vary, but the report of the National Bank of Rwanda (NBR) – the financial sector regulator – for the fiscal year 2022/2023 shows that it averaged 16.31 per cent in that year under review.