The Rwanda Revenue Authority has issued a warning to all districts against illegal taxation on produce and livestock products. RRA was responding to runaway taxation that is becoming a heavy burden on rural producers,
The warning comes after rural residents reported the existence of multiple taxes on produce and livestock moving across district borders as well as double taxation on commodities in local markets.
“Article Four of the Presidential order establishing the list of fees and other charges levied by decentralised entities shows the market fees to be charged to a trader who sells goods or services in a place designated by the competent authority.
“It is in this regard that residents who bring produce and livestock for sale in local markets should not be subjected to taxation,” said RRA commissioner-general Richard Tushabe in a notice to all district administrations.
Poorly regulated taxation of produce and livestock products by local authorities had left farmers counting losses while adding to the high prices consumers have to pay for the produce.
Farmers told Rwanda Today that movement of produce and livestock from one district to another is subjected to multiple taxes, while in other instances tax collectors at rural local markets impose charges on incoming and exiting commodities, resulting in double taxation.
“Collectors are stationed on the district roads, stopping farmers carrying anything from milk, bananas, maize, and even domestic animals. You have to pay them or else your plans are disrupted because they assume you are going to sell to someone,” said Claude Ndahayo, a milk transporter based in Rulindo District, whose job involves taking produce from the farm gate to a collection point in Kigali.
Mr Ndahayo said the fees, which range between Rwf300 and Rwf500 depending on the amount one carries, result in them operating at a loss yet they are not the actual traders.
A tax collector in Rulindo and Gakenke told Rwanda Today that, as per the district directive, the fees are levied on produce and livestock “meant for trade” going out of the district the same way construction materials from quarries and wood and charcoal from forests are taxed. Residents in Kamonyi, Ngororero and Rusizi raised similar concerns.
The law gives district councils the leeway to set the thresholds for market fees depending on the structure of the market and whether it is in an urban or rural setting.
However, in some districts, councils have extended this taxation to outside the market place in a bid to maximise local revenues. The race by districts to meet revenue collection targets, which they set in their performance contracts this year, has seen officials increase non-tax charges, fees and fines; trying to loop in more people into the tax bracket as well as introducing fees on previously untaxed areas.
“This practice is illegal and we previously condemned similar cases in Kamonyi District that were brought to our attention,” Jean Marie Vianney Gakwerere, deputy-commissioner for Regions and Decentralised Taxes told Rwanda Today.
The illegal charges levied on agricultural produce and livestock products by districts has partly been blamed for the rising cost of key foodstuff, mainly from the rural areas, which result in the end consumer and the farmer bearing the heaviest burden.Some district officials agreed that the tax collectors were implementing the law incorrectly and Rulindo District Economic Affairs vice-mayor Prosper Mulindwa promised to look into the issue.