The Social Democratic Party (PSD) has promised to advocate for lowering value-added tax (VAT) to 14 per cent from the current 18 per cent, a move the party stated would increase residents’ purchasing power, lower the cost of living, and stimulate economic growth. PSD made the pledge on Saturday, June 22 as it launched its electoral campaign in Nyamata Sector, Bugesera District, in a bid to garner votes for its candidates who are looking to secure seats in the lower chamber of Parliament. The party also launched its bid to convass support for incumbent President Paul Kagame’s re-election in the elections slated for July. VAT is a tax on the consumption of goods and services. It is paid by the final consumer of the taxable goods or services – at every stage of production (every time a product is sold) from the sale of the raw materials to its final purchase by a consumer. ALSO READ: PHOTOS: PSD launches electoral campaign in Bugesera Senator Juvenal Nkusi, one of the founding members of PSD, said that “as PSD, we agree that taxes are necessary to the country, but we want that value-added tax be reduced to 14 per cent.” Such VAT rate proposal, he said, is practical because the current 18 per cent is the highest in the East Africa. Looking at the region, Kenya charges a VAT of 16 per cent, while Tanzania, Uganda 18, Rwanda, and Burundi charge 18 per cent. At the continent level, some countries such as Mauritius impose a VAT rate of as low as 15 per cent. “Since we want to be competitive on the market, we should know how to handle the situation by reducing that tax which can result in enabling people to get more money to purchase goods and services and grow the economy,” Nkusi said. He said that with the current VAT rate on the taxable purchases, consumers have to incur high cost on spending. The party’s proposition is meant to increase people’s purchasing power, stimulate production, and make the country’s products and services competitive on the market, he observed. “In an economy, when you have many people with purchasing power, and they buy a lot of goods and services, it means you are increasing employment, and production. But when people are unable to buy because it [VAT tax] is high, it slows down production. ALSO READ: Consumers entitled to 10% VAT reward for their purchases On the concern of whether lowering VAT rate could not hinder the country’s tax collection effort and negatively affect budget needed for various purposes including public interest initiatives such as healthcare, and education, Nkusi said that the country could instead get more tax revenues resulting from increased consumption among the population. PSD first vice-president Valens Muhakwa said that the heavier the tax gets, the lower compliance among taxpayers. “Therefore, reducing VAT from 18 per cent to 14 per cent is a good way to increase the number of taxpayers, and realise that it is not a burden for them such that the more tax collected contributes further to the development of our country,” he said. Josette Riberakurora, a resident of Nyamata Sector, in Bugesera District, said that the good proposal is good because it would benefit low-income earners by lower expenses on consumer goods and services. “Charging us lower tax rate is laudable,” she said, pointing out that high tax rates hinder residents’ ability to increase their income. VAT is an important tax as it accounts for the country, according to the Rwanda Revenue Authority (RRA). In the financial year 2022/2023, Rwanda collected more than Rwf691 billion from VAT, which accounts for more than 30 per cent of the total tax revenues that amounted to slightly over Rwf2.25 trillion, according to RRA Annual Report for 2022/23. The PSD three-week campaign trail launched on June 22, is expected to end on July 13, in Nyarugenge District, at a site commonly known as Tapis Rouge in Nyamirambo. On Sunday, June 23, PSD will take its campaign to Kamonyi District, Southern Province, at football pitch located in Gacurabwenge Sector, according to the party’s agenda.
![Members of PSD during the launch of the electoral campaign in Nyamata Sector, Bugesera District on June 22. Courtesy[91]](https://www.newtimes.co.rw/thenewtimes/uploads/images/2024/06/22/thumbs/1200x700/51446.jpg "Members of PSD during the launch of the electoral campaign in Nyamata Sector, Bugesera District on June 22. Courtesy[91]")
