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TUKO.co.ke journalist Wycliffe Musalia brings over five years of experience in financial, business, and technology reporting, offering deep insights into Kenyan and global economic trends.
Kenyans have raised concerns over motor vehicle tax proposals in the Finance Bill 2024.
The National Treasury introduced a raft of new tax proposals in the Bill to finance the fiscal year 2024/25 budget.
If passed into law, the bill would require motor owners to pay 2.5% of their car's value as tax.
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The Treasury capped the tax at KSh 5,000 minimum and KSh 100,000 maximum, paid when purchasing car insurance cover.
According to the National Assembly Finance Committee chair and Molo MP Kimani Kuria, the motor vehicle tax is a user-pay tax, and those who do not want to pay should stop using their cars.
"The motor vehicle tax is a hybrid of income and wealth taxes and tries to factor in a user-pay tax. If you do not want to pay the motor vehicle circulation levy, then do not use your car," said Kimani.
Kimani noted that the tax is aimed at encouraging investment in elaborate public transport.
The legislature annoyed the majority of Kenyans, with some saying it would add a burden to the insurance fee, which they struggle to pay.
@ItsMutai wrote:
"My car is KSh 1.5 million. At 4% comprehensive cover, I pay about KSh 65, 000 to GA per year. Now, add a motor vehicle tax of 2.5%. That's KSh 37,500. In total, I will be paying to GA KSh 102,500 per year. Essentially this is paying to own a car. This is a punitive proposal. Not good."
@AmbokoJH explained:
"An income tax is, as the name suggests, a tax on income generated. So whereas the proposal is to introduce the tax via an amendment to the Income Tax Act, the motor vehicle tax itself falls short of what ideally makes it eligible for classification of an income tax."
@MutumaoNkanata said:
"Say No To The Finance Bill 2024 Motor Vehicle Tax!"
@TISAKenya argued:
""Motor Vehicle Tax, anyone with a side of more Tax?" So, if your car is worth 1.5 million, you might as well start saving up that 37,500 for the government now IF you don't make your voice count. Let's demand a bill that reflects the reality of Kenyans."
@Kabogo_Henry noted:
"If you don't understand how awful the Motor Vehicle Tax is, wait for the December holiday transport crisis..or when children will be coming and going back to school."
@wambuijl claimed:
"Last year it was Housing Levy and this year Motor Vehicle Tax. Give people something to focus their complaints on so they miss out on the Trojan Horse that is the entire finance bill. We'll only know in 6 months."
@phil_kimani said:
"I would be willing to pay a motor vehicle tax if the taxes on vehicles were not already so high. Duty, excise, VAT, IDF, RDL... This is especially going to be punitive on business in the TOT regime."
President William Ruto's administration seeks to collect a 3% withholding tax from Kenyans who supply goods to public entities.
The Finance Bill 2024 also proposed introducing a tax withheld by owners or operators of digital marketplaces or platforms.
If approved by the National Assembly after the public participation exercise, the new taxes will take effect on July 1, 2024.
Proofreading by Otukho Jackson, a multimedia journalist and copy editor at TUKO.co.ke
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Kimani Kuria said that Kenyans who do not want to pay the tax should leave their cars home.
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