Editor,

RE: "Tax relief, more revenues expected under new immovable property law” (The New Times, December 1). First, it is good to revise tax laws to increase revenue as the government needs money to spend in priority areas. However, I have realised that this is done without consulting the public. What does it take to conduct a small survey to hear the opinions of the people you are serving?

Second, why should a commercial property, which is generating income from the property, pay 50 per cent less that of an individual?

Third, what possibly could be the rationale to multiply a tax 10 fold (1000 per cent) – from 0.1 per cent to 1 per cent on residential houses? The small capital formation a poor citizen is able to build may be through loans/mortgages and yet it will be heavily taxed!

Let me illustrate what that 1 per cent means. A regular Joe who earns RF350,000, owns and lives in a house valued at Rwf40 million and repaying a mortgage of half that money to a local bank at 18 per cent with monthly installments of Rwf200,000. This means that Joe will remain with Rwf150,000 for all his other expenses. Now with the new law, this Joe is supposed to pay Rwf400,000 (equivalent to 1 per cent of the property value) to government. Where will that money come from?

I will wonder if the 0.1 per cent is now fully collected and found insignificant before increasing the threshold.

My advice is to increase the base. It increases the revenue and distributes the fiscal pressure equally.

Finally, I might be the dumbest person because I don’t see the correlation between this tax and the price of an affordable house. Will this law exempt people from paying land and property taxes on an affordable house? How will this possibly affect the unit price? At best, it will reduce the occupancy fiscal burden. Will the law provide incentives such as VAT exemption, etc. for affordable housing developers? If this is the intent, how will this be administered?

Please lawmakers, analyse carefully this proposal. Increasing the cost of living without providing means to that is a dangerous move.

David