Government to enforce payment of property tax

The Government plans to enforce property tax on all land asset owners. This will in effect increase its revenue resources meant to develop important infrastructure like roads and sewerage systems. This property tax law, which has been dormant since 2002, will make sure that those with immobile assets, such as landlords, pay to the government a fixed levy every year in accordance to the value of their property. It was introduced as one of three decentralised taxes, alongside rental income tax and business licence taxing, which are exclusively meant to provide district administrations with resources to run their day-to-day activities. As with several other tax regimes, property tax law was met with skepticism, with several tenants fearing that their landlords could shift the burden to them by increasing rent fees. However, experts have quelled the fears, saying it would be “illegal and unfair” if landowners increased rent solely on the precept of property tax. “All land owners know that property tax exists and is supported by law, much as they do not pay it because it has been a very easy system to cheat. Therefore, if at all people start saying that the enforcement of this law is forcing them to increase rent, then it is not fair,” Charles Haba, the president of Real Estate Association of Rwanda said. “A responsible citizen would pay taxes willingly, especially in a society like Rwanda where you see your money is being put to use in a good way. It enables government to offer goods and services more efficiently.” District not enforcing law Although property tax was introduced to enable effective running of districts, surveys indicate that districts have failed to enforce the law, leaving them running short of finances to make them run as efficiently as they should. In a presentation titled, “The Political Economy of the Property Taxation in sub-Saharan Africa,” it was indicated that property tax amounts to only 12 per cent of the three decentralised taxes, and 3 per cent of all local revenue collected in Rwanda annually. “In theory, property tax is non-distortional, efficient and progressive; but it is also difficult to administer. Districts find it difficult to effect this law because valuation of property is expensive, while only about 1,000 people in the whole of Kigali are registered,” Tom Goodfellow, a lecturer at London School of Economics and award winning researcher, said during the presentation yesterday. “Revenue from property tax in Rwanda has achieved very small increases each year and sometimes decreases. However, it holds great potential and in many other African countries, it amounts to 30 per cent of total revenue collection.” According to Esther Mutamba, the director-general of Rwanda Housing Authority, there is no contradiction between enacting property tax while also seeking to encourage the private sector to set up affordable housing.

National

Government to enforce payment of property tax