Motorists will have to dig deeper into their pockets when acquiring insurance cover if proposals contained in the Finance Bill 2024 sail through.
Finance Bill 2024, contains tax proposals the government is banking on to raise revenue and subsequently finance the ambitious projects the Kenya Kwanza administration is planning to undertake.
The new tax anticipates that the amount payable shall be based on the motor vehicle's value at a 2.5 per cent rate.
"Notwithstanding any other provision of this Act, a tax known as motor vehicle tax shall be payable to the Commissioner on each motor vehicle at the time of the issuance of an insurance cover," read part of the bill.
"Motor vehicle tax shall be payable based on the value of the motor vehicle, at the rate specified in the Third Schedule."
The minimum amount a motorist can pay is Ksh5,000 while the amount can be increased up to Ksh100,000 depending on several factors including the make, model, engine capacity and year of manufacture.
Parties exempted from paying the motor vehicle tax include hospitals operating an ambulance, national and county governments, the Kenya Defence Forces, the National Police Service, the National Intelligence Service and diplomatic personnel.
The insurers are required to remit the tax within five working days after issuing the insurance cover.
Any insurer who fails to collect and remit the tax will be liable to pay 50 per cent of the uncollected tax plus the actual amount of the uncollected tax.
"The Commissioner may prescribe such guidelines as may be appropriate for determining the valuation of a motor vehicle."
The move, if adopted is part of the government's strategy to explore alternative revenue sources - in line with the International Monetary Fund's (IMF) fifth review.
The review, concluded in July 2023 also stressed the need for a rapid shift from traditional fueled vehicles to electric to combat the effects of Climate Change.
