Billions Ruto Had Targeted from Rejected Motor Vehicle Tax Proposal
President William Ruto will lose out on the expected billions from the Motor Vehicle Tax.
National Assembly Finance Chair Kimani Kuria indicated that Ruto’s administration aimed to generate Ksh58 billion with the introduction of the tax.
Ruto’s administration proposed the Motor Vehicle Tax as a revenue-raising strategy for the Ksh3.9 trillion budget, with motorists expected to pay 2.5 percent of their vehicle’s value.
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“The motor vehicle circulation tax as proposed is projected to raise Ksh58.02 billion,” the MP stated in a May interview on Citizen TV.
Initially, Ksh58 billion was the collection target when the maximum cap was Ksh100,000.
The projected revenue would have increased significantly with the removal of the Ksh100,000 cap, resulting in higher payments from owners of expensive vehicles.
For example, owners of vehicles worth Ksh10 million would pay Ksh250,000 annually without the cap.
Reasons for Rejection of the Tax Proposal
In addition to public outcry, the proposed tax raised several legal issues, as it targeted assets rather than income.
“The Ksh100,000 cap makes the tax discriminatory and non-progressive,” the finance chair stated in his parliamentary report.
“The proposal would negatively impact the insurance behavior of vehicle owners and adversely affect the insurance sector.”
Moreover, there were concerns about the government imposing a tax on an already-taxed vehicle value, including import duties.
“Commercial vehicles are subject to advance tax, and imposing this tax would amount to double taxation.
“Based on these issues, the Committee recommends the deletion of the proposed Motor Vehicle Tax,” the report concluded.
Billions Ruto Had Targeted from Rejected Motor Vehicle Tax Proposal
