National Assembly Finance Committee Chairperson Kuria Kimani revealed that Parliament would consider three alternatives in place of the proposed 2.5 per cent Motor Vehicle Tax.
Kenyans.co.ke, established that road user stakeholders suggested the three alternatives and included increments for charges on fuel.
For starters, a section of the stakeholders advised that it would be better for the government to increase the Road Maintenance Levy (RML) instead of introducing the new tax outlined in the Finance Bill, 2024.
As outlined by the committee, the levy was proposed to be increased from Ksh3 to Ksh5.
"At the same time, Hon Kimani has revealed that the Committee will put to thought, the proposal by a number of stakeholders to substitute the proposed Motor Vehicle Tax (MVT) at 2.5 per cent of the value of the vehicle with an adjusted on-the-road maintenance levy," read the statement in part.
Impact
- Should the committee opt to increase the levy instead, Kenyans could face higher pump prices given that the levy is usually charged on the pump prices that are revised monthly.
- The RML is usually distributed among various road agencies such as the Kenya Urban Roads Authority (KURA) and is used to undertake road projects.
On the other hand, the committee also noted that some stakeholders also pushed for increased excise duty charged on fuel.
"In the alternative, they suggested that the Committee could increase excise duty on fuel from Ksh18 to Ksh35 and achieve a similar intended purpose of introducing the MVT," read the statement in part.
Impact
- Equally just as the increment of the RML, an increase in taxes will see the prices of fuel increase. This is because, importers will be charged more for the fuel products, a move that will force them to pass down the additional costs to the consumers.
Thirdly, the stakeholders also proposed a new formula for the road licence charges which is imposed by the National Transport and Safety Authority (NTSA).
Instead of the current rates that are based on the seating capacity and weights of cars, the stakeholders proposed that NTSA determines the licence charges based on the vehicle's engine capacity.
Impact
- Through the adoption of the proposed formula, motorists with vehicles of higher CC will be charged more. Therefore, if motorists who offer Public Service Vehicle (PSV) services pay more, they are likely to pass down the additional costs to the motorists.
- This could be done through the increment of fare charges.
The three alternatives were proposed following government plans to introduce the Motor Vehicle Tax which is proposed to be taxed at a rate of 2.5 per cent of the vehicle's value.
The tax is proposed to be charged annually and imposed during the acquisition of an insurance cover.
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