Parliamentarians oppose tax reduction

With more than half the 2008 Budget expected to be funded through taxes, parliamentarians have expressed fear that if government goes ahead to reduced or scrape some of the tariffs the move would hurt the economy. But some were concerned that high taxes are hurting the economic development of Rwanda. Hon. Bajeni Mpumuro, a parliamentarian opposed to the reduction said: “They (businessmen) should tell us the impact of this (reducing taxes) because already government has a deficit of Frw24billion and yet the private sector is demanding a lot.” According to him, reduction of taxes hasn’t necessarily led to reduction of prices. He said prices of some goods whose taxes were reduced in the 2007 Budget have remained high. He cited some of the goods as cement, computers and medical supplies. He also questioned the corporate social responsibility of some companies in the country complaining that they are not felt on ground. On his part honorable Jean Baptiste Gatabazi expressed dissatisfaction that: “There is a problem of monopoly in the market. On the issue of cigarettes and tobacco parliamentarians said BAT should be taxed like a foreign company since it ceased its operations in Rwanda. The parliamentarians were reacting to the Private Sector Federation’s (PSF) demand that some taxes be reduced and those that make Rwanda unattractive for investors; be scrapped completely. In response to the reaction, the PSF secretary general Emmanuel Hategeka said the problem of prices of cement is something to do with low capacity to produce locally and it is a regional challenge. The federation chairman Mr. Bayigamba said deciding on specific tax system was after studies and consultations in the region (EAC). He however said the federation has no reliable statistics on trend of businesses in the country, but was quick to add that the recent census done by the federation would provide factual information on the issue. Ends