Winners and losers in 2015/16 Budget

Consumers of sugar and wheat products will continue to enjoy reduced prices, thanks to tax regimes spelled out in the 2015/2016 fiscal year budget. While presenting the Rwf1.768 trillion budget to Parliament on Thursday, the Minister for Finance and Economic Planning, Claver Gatete, announced a number of tax cuts and exemptions on imports from outside the East African region, most of which were first introduced last year. Gatete said imported sugar weighing less than 70,000 tonnes and wheat will continue to enjoy the tax exemptions. He explained that the exemptions and cuts are renewed annually by EAC ministers FOR finance, adding that without the exemption, the taxes on wheat would have gone up by 35 per cent. He added that waivers are in the context of Common External Tarrifs on imports coming from outside the East African Community bloc. Gatete told The New Times that though it would seem as if the tax reduction and exemption have been in effect since July 1 last year, the changes were not permanent and require approval on an annual basis by EAC ministers for finance. “The exemption is not permanent, but approved on annual basis by all ministers of finance in EAC. Some drop and others go up depending on the situation,” Gatete said. Currently a kilogramme of sugar retails at between Rwf650 and Rwf1,100, while market prices for wheat are at between Rwf550 to Rwf650 per kilogramme. Other winners in the budget are rice consumers whose tax was also unchanged at 45 per cent, a huge relief as it would have gone up to 75 per cent (for unprocessed and semi-processed rice). Tax experts say the move will have a trickledown effect to ordinary citizens though it is uncertain when change can be felt. Paul Mugambwa, a senior tax manager at PricewaterhouseCoopers, said the time taken before the changes can be felt by buyers remains debatable as importers might still be holding stocks imported before the budget reading. He noted that it might be too early to gauge the benefits as the exemption and reduction of tax could have been eroded by the foreign exchange rate. “As was previously experienced, when fuel prices initially went down, there was not much change in the overall pump prices due to fluctuations in the exchange rate,” Mugambwa explained. Public transport operators also have reason to praise the new Budget following the maintaining of import duty at 10 per cent (would have gone up to 25 per cent) for buses licensed to carry between 25 and 50 passengers, while those with capacity to transport over 50 passengers remain exempted. Charles Ngarambe, the chief executive of the Kigali Bus Service, said the tax reforms had played a huge role in enabling transporters increase their fleet to meet the growing transport demands. The move is further expected to improve the country’s public transport sector which is still faced by a shortage of public transport service vehicles. Road tractors and semi-trailers will remain tax exempted, a move that could fast-track infrastructure development directly inline with the 2015/16 Budget theme: “Infrastructure Development for Social and Economic Transformation”. Motor vehicles with capacity between five and 20 tonnes will be taxed at 10 per cent, and those with capacity beyond 20 tonnes will be tax exempt compared to a 20 per cent import duty they paid previously. Experts say the development will promote the local logistics industry, increasing its competitiveness in the region. Losers Out of the total domestic revenues estimated at Rwf1,174.2 billion, a total of Rwf894.8 billion will be funded through tax revenues. To achieve this, Minister Gatete tasked Rwanda Revenue Authority to introduce and increase taxes in several areas. Motorists are set to pay more for fuel in the coming days following an increase in taxes on cars for road maintenance and the introduction of taxes on fuel imports to facilitate setting up of oil strategic reserves. This will raise Rwf5.2 billion for road maintenance. The levy to be introduced for imported fuel products is projected to contribute about Rwf8.6 billion to enable the government set up strategic oil reserves. However,Ngarambe said there was no need to worry since any adjustment in transport fares is done in consultation with the Rwanda Utilities and Regulatory Authority. Smokers are the other losers in the new Budget as levy on Tobacco is set to increase to raise Rwf5 billion.

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Winners and losers in 2015/16 Budget