The National Assembly Finance Committee chair and Molo Constituency Member Kuria Kimani has supported the government's plan to tax car owners via a motor vehicle circulation tax.
The proposed tax in the new Finance Bill 2024 aims to establish an annual tax that will be paid when obtaining auto insurance coverage. The tax will be 2.5% of the vehicle's value, with a minimum of Ksh. 5,000.
According to Kimani, who referred to the levy on Tuesday as "a hybrid of income and wealth tax", the goal of the levy is to stimulate investment in a sophisticated local public transportation system, a move that could potentially revolutionize our daily commute and reduce traffic congestion.
"If you go to economies ahead of us, there are elaborate and very efficient public transport systems," the MP told NTV in an interview.
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"Every time investors want to invest in our public transport system through public-private partnerships, the feasibility studies show that we like to drive our cars so much that we are not able to attract foreign investment."
He maintained that Kenyans prefer driving because the country's public transportation system is not "elaborate," and they would forgo driving if given a better option.
Furthermore, Kimani notes that although the motor vehicle circulation tax will be linked to the yearly renewal of insurance policies, Kenyans will still be able to avoid paying it by not using their cars at all, ensuring that the tax is only paid by those who benefit from private vehicle use.
"If you don't want to pay the motor vehicle circulation tax, then don't use the car, like how you don't use the expressway if you don't want to pay for it," he said.
The bill states that the motor vehicle circulation tax, as specified in the Privileges and Immunities Act, does not apply to government-owned vehicles or ambulances, ensuring that essential services are not burdened by this tax.
An underwriter may be penalized 50% of the unpaid tax and the actual amount of unpaid tax if they do not collect and remit motor vehicle tax within five working days of the motor vehicle insurance coverage being issued.
