Clarification: No tax burden on passengers

We wish to respond and clarify to the letter published in the editor column by MKAMANA Jeanne of of 25th August, 2008 with a headline; “passengers likely to bear burden of RRA tax levy.” Rwanda Revenue Authority has not increased any tax fare or rate in regard to taxes levied on motor vehicles, but rather has established an efficently softer and convinient system of declaring and paying tax dues accruing to motor vehicle owners. The tax administraion recently changed its corporate identity with the main objective of improving and providing quality, faster and equitable services and out of this, a number of innitiatives to facilitate the business community have been established and one of them is the introduction of quarter and annual system of paying PAYE and Profit tax on motor vehicles used for public transport purposes. This facilitation starts from September 1 with tax payers who will be declaring their profit tax of the first Quarter of 2008. In her letter to the editor, Jeanne MKAMANA says that the RRA has indirectly inflated the profit estimations and that thus creating a higher tax burden which is far from reality and baseless. We wish to inform the writer that previously owners of motor vehicles who are in this case the taxpayers used to come to the RRA offices every month irrespective of where they live or work from to declaire and pay as little as two thousand nine hundred francs only (FRW 2900) for someone declaring monthly Pay As You Earn (PAYE) for both the driver and conductor or one thousand three hundred and fifty francs (1350FRW) for the driver of his or her taxi commonly known as taxi voiture. However, this new facilitation will enable and allow the vehicle owner to declare and pay this tax fare and at the same time declaring profit tax either quarterly or annually thus preventing him/her the burden of monthly visits and queues at the RRA offices. This kind of payment shall apply to all types of cars in transport business with their respective tax fares which also reflect the size and capacity of the vehicle. Therefore, the writer ought to be informed that this new arrangement has not whatsoever inflated any profit estimations to the taxpayers, but rather will enable them to settle their tax dues inform of prepayments and getaway with last minute long queues that lead to losses because any time lost is money or at times lead taxpayers to penalties due to use of ilegal agents. The new arrangement also promotes the principle of equity because profit tax on motor vehicles shall be computed in reference to the capacity of the vehicle. For instance, previously, a minibus was paying an amount equivalent to that of a coaster and a bus yet the capacity of the three vehicles is different interms of the number of passengers, a Bajaja (velomoteur) was paying the same amount with big motor cycle yet the capacity and incomes are different. The new facilitation came to harmonize vehicles tax inaccardance to their capacity. In the same letter, the writer says that RRA seem not to have taken into account the likelyhood of the increased burden being pushed to the passenger due to scarcity of public cars, this judgemet is far fatched and doesnot hold truth due to the fact that there was no increase in vehicle taxes, the only change done was to harmonise payment schedules to provide quality services. In addition, transporters do not levy their transport fares basing on the taxes they are to but rather on other macro and micro economic factors like fuel prices, inflation rates, demand for transport determined by the size of travellers, distance to travel, nature of roads, time and other factors in which I believe the Ministry of Transport is there to regulate transport fare incurement. RRA wishes to inform the general public that this innitiative was a result of wide consultations with people in the transport industy and the aim was not to hike transport fare but rather to facilitate people in the same business to honor their tax obligations on time and at their most convinient times thereby avoiding late payments associated penalties and time wastage. RRA also once agin informs motor vehicle owners that the time of tax payment rests upon their decisions, they may opt to declare quarterly or annually, whichever period that is most convinient for them. Thank you and we continue to value your compliance. Contact: ROBERT.MUGABE@RRA.GOV.RW