Rwanda and the other East African Community (EAC) member countries - Kenya, Uganda, Tanzania and Burundi – will on June 11 present their 2015/16 financial year budget estimates. Before the D-Day, The New Times will serialise views and budget expectations of various players in the local and regional economies, including traders, industrialists, academics and farmers, as well as bankers and SACCOs and the microfinance sector, among others.

Today, bankers share with The New Times’ Ben Gasore on why government should introduce tax incentives on long-term savings; mortgage financing, as well as for good taxpayers in the 2015/16 national budget.

Sanjeev Anand, the chairman of the Rwanda Bankers Association, and Maurice Toroitich, the managing director of KCB Bank Rwanda, say tax concessions for long-term savings will make it easy for more people to own homes through mortgage financing.

"In countries with incentives on long-term savings, people are encouraged to save, making it easy for them to access affordable financing to build or buy their own homes,” Toroitich points out.

He says traders who comply with their tax obligations and declarations should also be given more tax incentives in the next budget, arguing that this will encourage compliance.

He adds that if traders who file their tax returns on time were given incentives, they would be encouraged to deposit their daily sales with banks without fearing that the Rwanda Revenue Authority (RRA) would use bank records to compel them to pay additional taxes.

"Presently, most traders don’t bank money from their daily sales. Those who do, bank a small portion of their daily sales to avoid being tracked by RRA,” he notes.

Anand believes that if government had policies tax incentives and implements them consistently, this could help grow the private sector.

He adds that the practice would also attract foreign investors to invest in Rwanda.

"There has to be consistency in these policies unlike in other countries, which do retrospective changes on policies that affect investor-sentiment,” Anand said.

The bankers’ association chief also points out that Rwanda’s net savings were almost at nil "because few people have a savings culture”.

He says this has contributed to high interest rates on loans in commercial banks.

Rwanda’s budget for the 2015/16 financial year projected to Rwf1,768.3 billion and will focus on improving agriculture, addressing energy supply constraints, infrastructure development.

business@newtimes.co.rw