Imposing taxes on co-ops will affect savings culture - experts

While presenting the 2015/16 financial year budget proposals to Parliament last week, Finance Minister Amb Claver Gatete announced that 6,000 co-operatives would be integrated in the taxable bracket as one the steps aimed at broadening the tax base. However, experts have cautioned that this could discourage people from saving and hence derail government’s efforts toward financial inclusion. Patronella Namubiru, a senior manager at Deliotte Rwanda, a consultancy firm, said such a move could discourage people from saving which will, ultimately, affect economic growth. Namubiru was speaking during a breakfast meeting organised by Deloitte to review East African budgets in Kigali on Tuesday. The proposal is one of the strategies by government to widen the tax base to finance its Rwf1.768 trillion budget for the next fiscal year. Namubiru, however, said the proposed tax on fuel imports should not be cause for alarm, arguing that that will not necessarily lead to an increase in fuel prices. Speaking at the event, Stephen Ruzibiza, the Private Sector Federation (PSF) chief executive officer, said bringing more entities into the tax net is essential for any country that wants to meet its development objectives. He argued that once businesses start looking at taxation as an obligation of every citizen, this will increase tax compliance and boost government revenues. Ruzibiza also urged entrepreneurs to appreciate the fact that Rwanda is still a young economy that needs to be supported by all to achieve its objectives. Robert Mathu, the Capital Markets Authority chief executive officer, urged government and the private sector to take advantage of the huge opportunities the stock market presents them to raise finance for long-term projects, like infrastructure and power generation. He noted that funding such projects requires long-term capital, which they can raise on local bourse through IPOs and bond issuance. According to John Bosco Kalisa, the TradeMark East Africa, senior programmes manager, the 2015/16 budget should have focused more on how to reduce the country’s trade deficit by supporting export-oriented activities. business@newtimes.co.rw

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Imposing taxes on co-ops will affect savings culture - experts