The recent tax reforms introduced by the Rwandan government on February 10 have attracted mixed reactions from citizens. The changes, will take effect in July at the start of the next fiscal year, are aimed at driving economic growth. While some acknowledge the necessity of increasing domestic revenue, others worry about the financial implications of the people’s purchasing power. ALSO READ: What you need to know about Rwanda’s new tax reforms Among the new changes is 15 per cent excise duty on the cost-insurance-freight value of make-up, body lotion, and hair products. The government has re-introduced a value-added tax (VAT) on mobile phones and ICT equipment which had been exempted for more than 10 years to encourage uptake. To encourage responsible gambling, the tax on Gross Gambling Revenue will increase from 13 per cent to 40 per cent and withholding tax on winnings will increase from 15 per cent to 25 per cent. VAT and a 5% withholding tax will also be reinstated for hybrid cars, while electric vehicles remain tax-exempt. ALSO READ: Why tax on gambling was hiked by 27% An excise duty on beer is expected to rise from 60 per cent to 65 per cent of factory price. An excise duty on cigarettes will go up from the current Rwf130, to Rwf230 per pack, plus 36 per cent of retail price. The New Times spoke to Rwandans from various walks of life, including an economist and a taxation expert, to hear what they make of the reforms. Paul Frobisher Mugambwa, the Head of Tax and Fiscal Policy at PwC Rwanda The new tax policy reforms will affect different taxpayers in different ways, depending on their income, consumption, and production patterns. Some taxpayers may benefit from the reforms, while others may face a higher tax burden. While the reforms aim to strengthen the economy, there are valid concerns about the potential burden on taxpayers, particularly businesses. However, the VAT will generate revenue that can be used to invest in digital infrastructure, innovation and skills, which could boost the productivity and inclusiveness of the digital economy. Therefore, the impact of the reforms on the tax burden of taxpayers will depend on the balance between the costs and benefits of the reforms, as well as the availability and effectiveness of compensatory or complementary measures. ALSO READ: Government aims to raise tax-to-GDP ratio to 19% by 2029 Kevin Umuhire, 30, IT specialist Gambling can be addictive and harmful, so increasing taxes on it might discourage excessive betting, especially among the youth. At the same time, it will raise more money for the government because the betting companies were making significant profits. The increase on taxes will have an impact on consumers, particularly winners. Previously, some people would win without being charged taxes, but if every amount is now subject to taxation, that will reduce what gamblers actually take home. This could make gambling less attractive for some people. ALSO READ: Rwanda makes tax reforms to drive economic growth Valerie Dushime, 24, consumer of cosmetics We are already struggling to afford cosmetic products. This tax will make them even more expensive, and this will reduce our ability to buy enough cosmetics. One set of cosmetics cost over Rwf120,000 and now with the tax the price will rise even higher. I feel like the efforts should be applied to the way sellers create the receipt because all the time they tend to print a receipt that has a lower price than the actual price one pays. Now, we will end up carrying the burden as consumers. And I feel like of all things cosmetics really didn’t need to be taxed more. Esther Uwase, 25, resident of Rubavu District As a makeup artist, this tax increase is a big blow. Cosmetics are not luxury items for many of us, they are tools of our trade. Higher prices mean fewer customers can afford professional products and services, and even for personal use, people will start cutting back and going for cheaper options. A full set of quality cosmetic products was already expensive, and with a 15% excise duty, the cost will be even harder to manage. Many beauty professionals and small business owners in this industry will struggle to keep up. Instead of taxing cosmetics this heavily, I wish there were incentives to support local beauty brands and make high-quality products more accessible. Jean de Dieu Iradukunda, 26, electronics shop owner, Kigali Many young people depend on smartphones for education and work. Increasing taxes on electronic gadgets will slow down digital inclusion, especially for students who already face financial constraints. Another problem is that taxes keep increasing, but people’s incomes remain the same. Salaries and incomes haven’t gone up, and yet we are going to pay more. We understand where the tax money goes, but the rising costs will affect us in every aspect of our lives. ALSO READ: Government aims to raise tax-to-GDP ratio to 19% by 2029 Diane Ingabire, 27, resident of Rwamagana District Hybrid cars are supposed to contribute to the future of transport, but with higher taxes, they will become less accessible to middle-class people like me. If the goal is to reduce emissions, the government should instead offer incentives for more environmentally friendly cars. Although the target is decision to shift to fully electric cars, we still have few charging stations across the country. David Rukundo, 32, tech expert Increasing taxes is necessary for government revenue, but at what cost? The key is balance. How do we ensure tax collection without strangling businesses and consumers? For example, when the tax on alcohol, electronics, and hybrid cars goes up, it doesn’t just affect individuals, it also impacts entire industries. Businesses struggle with declining sales, potential layoffs, and higher operating costs. Consumers, on the other hand, are left choosing between their needs and wants, which ultimately leads to reduced spending across multiple sectors. Instead of just increasing taxes, the government could explore alternative strategies such as expanding the tax base, improving compliance, or offering incentives to businesses that drive economic growth. That way, we can generate revenue without stifling progress and everyday livelihoods. ALSO READ: Rwanda imposes tax on Netflix, Amazon, other foreign digital services Patrick Nshimiyimana, 32, resident of Musanze District I understand the health concerns behind increasing taxes on cigarettes, but this is a huge jump. A pack that was already expensive will now cost even more, making it harder for regular smokers to afford. Some people might quit, but others will just turn to cheaper, lower-quality alternatives or even smuggled cigarettes. Jean-Bosco Kalisa, economist, Kigali The excise tax is a regressive tax and the burden tend to fall on poor people and this will deter consumption for those products where there has an increment. In my view, a deeper economic analysis should have been conducted before introducing these new measures. With most of our SMEs are nascent and still growing, an increment in tax has a ripple effect in their revenues and profitability hence a careful analysis should have been done. Emmanuel Nshuti, 38, bar owner, Kayonza District The tax on beer is understandable from a public health perspective, but I hope the government finds a balance to avoid killing businesses. Maybe it will be gradual increase but the bad thing is that there is a high chance of the tax to increase even higher. And if this increase continues is going to hit both businesses and consumers hard. A lot of people come for affordable drinks, but if prices go up, customers will reduce their consumption or switch to cheaper, low-quality alternatives. This will affect our profits as bar owners.
