Hello and welcome to the Evening Brief Newsletter where we see motorists asking for higher fuel prices in light of the Finance Bill 2024. Also, check out our responder text with Babu Owino.
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🚗 'We Prefer Higher Fuel Tax'
Weeks after the Finance Bill 2024 delivered a tax shocker in the form of a 2.5 per cent Motor Vehicle Tax, motorist stakeholders have revealed that they are open to purchasing fuel at a higher price instead. They also offered the National Assembly Finance Committee three options of raising state revenue devoid of taxing car owners annually.
The Committee's Chairperson Kuria Kimani confirmed on Wednesday that his team was looking into proposals from Transport sector stakeholders to substitute the proposed Motor Vehicle Tax (MVT) at 2.5 per cent.
The 3 Options: The motorists, as a result, want the state to consider adjusting the road maintenance Levy, increasing the excise duty on fuel, and adopting a new formula for the road licence charges.
Road Maintenance Levy
Kuria noted that a section of the stakeholders want the levy increased from Ksh3 to Ksh5 and spare them the annual motor vehicle tax.
"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," a statement by the Committee read in part.
Impact on Consumers: 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.
Excise Duty
"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," the Committee noted.
Impact on Consumers: 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.
Road License Charges
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 on Consumers: 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.
Overall Effect: If the new proposal is adopted, the bill will spare vehicle owners from the 2.5 per cent motor vehicle tax whose minimum was pegged at Ksh5,000 and maximum at Ksh100,000 every year. Instead, the levy will be extended to the rest of the public who consume fuel directly or indirectly.
- The country has slightly over 4 million car owners against the total population of 55 million.
Catch Up Quick: In the Finance Bill 2024, the state wants all vehicle owners to pay the tax every year. Kuria challenged individuals disinterested in paying the levy to stop using their cars.
✈ Ruto's Ksh 10M Jet Admission and Lawyers’ Take
After dodging public debate on claims that he coughed Ksh200 million taxpayer money to charter a flight to the US last week, President William Ruto has admitted that he only paid Ksh10 million.
The Head of State came clean while attending the National Prayer Breakfast at Safari Park Hotel in Nairobi where he hinted that the Ksh10 million was a discounted price 'from foreign friends'.
What Ruto is Saying: "You know, I am a very responsible steward. There is no way I can spend Ksh200 million. In fact, let me disclose here that it cost the public less than Ksh10 million. When I was told the cheapest plane was Ksh70 million, I told my office, 'Go book Kenya Airways.'
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"When some friends of mine heard that I was going to travel on Kenya Airways and we have built a big reputation as a country, they asked me, 'How much are you ready to pay?' I said I cannot pay more than Ksh20 million. They said, 'Bring Ksh10 million we will give you the plane."
President William Ruto departs for the US on May 19, 2024.DPPS
Legal Pickle: Lawyers, however, observed that President William Ruto's admission may have violated the Leadership & Integrity Act. According to the Law, admitting a gift without disclosing the gifters and the quantum of the gift violates leadership integrity.
Speaking to Kenyans.co.ke, Advocate Moses Chelang'a explained that Ruto's speech was shrouded in secrecy leaving his administration under the attack of the public seeking to know the interest of the 'friends' who discounted the price of the plane. He also brought security into question following Ruto's admission that the friends offered the plane after learning that he was embarking on a public air transport carrier.
- "A gift to a state officer is a gift to the state. That kind of highly discounted price of the plane could be counted as a gift to the Republic of Kenya. It is a welcome thing but again, the President should have gone ahead and told us who these friends of Kenya are. Saying 'Friends of Kenya' is not closure enough," Chelang'a stated.
- "That is the Constitutional position and the Leadership and Integrity Act shows that there are some gifts we should not accept. One should be which may be seen to be compromising the objectivity, impartiality, and integrity of the recipient of that gift. It is for the interest of disclosure that we disclose who are these friends because this is not a personal gift but a gift to the republic of Kenya."
Lawyer Donald Kipkorir also corroborated with Chelang'a's view advising the President to ask for the true invoice and pay the bill in full.
- "Was the President advised by the State House legal team that it may not be proper, legal, constitutional, or statutory for a President to receive a gift, in cash or kind from a foreign entity? The best thing for our President to do to resolve the issue is to ask for an actual invoice from the private jet operator & pay the amount in full. A Discount is tantamount to a gift or bribe," stated Kipkorir.
View from the Opposition: In my responder text, Embakasi East MP Babu Owino accused the President of taking Kenyans for a ride. He further argued that the President should have opted to fly with the Kenya Air Force jet or commercially with Kenya Airways to keep the money in Kenya's circulation.
"He should have just boarded KQ. That would have promoted our economy rather than promoting his friends outside Kenya. That is called Foreign Absorption which is wrong in economics. He should have promoted domestic absorption where money should have been used to circulate in Kenya," Babu Owino explained.
Chat With Babu Owino
Full Disclosure: Babu Owino is a lawyer and a member of the opposition's Azimio la Umoja Coalition.
Derrick Okubasu: President Ruto admitted that he paid Ksh10 million for the jet to the US instead of Ksh70 million (which could have been the cheapest deal) and hinted it was a gift from friends
Babu Owino: So between his option from friends and the other alternative, which was safe? Ruto should not play with the minds of Kenyans because we are not fools. We know that he misused the money meant for Kenyans. We know what happened and his intention was not for the best interest of Kenyans.
Derrick Okubasu: Which should have been the best option, accepting a Ksh10 million jet or paying for the full Ksh70 million option?
Babu Owino: He should have used the Kenya Air Force and the fuel could have cost less than Ksh5 million. Why couldn't the President just make the stops? (The Kenya Air Force could be forced to stop nearly five times on the route)
Also, he should have chosen to board KQ. That would have promoted our economy rather than promoting his friends outside Kenya. That is called Foreign Absorption which is wrong in economics. He should have promoted domestic absorption where money should have been used to circulate in Kenya which meant staff would get monthly salaries on time. 🟥
Here are five other stories to keep tabs on today;
- The European Union gives Kenya duty-free access to its market after a trade deal.
- Nairobi County under Johnson Sakaja is expected to increase the funding for employees' car and mortgage loans from Ksh100 million to Ksh500 million.
- President William Ruto reveals that the United States is helping the Ministry of Defence to build a college block in Karen.
- UDA SG Cleophas Malala promised to name and shame party members next week over indiscipline and disrespecting the party.
- President William Ruto will embark on another foreign trip on Sunday. The destination remains a mystery.
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This newsletter was written by Derrick Kubasu and edited by Brian Muuo.
Washington Mito contributed to the content.
Graphics prepared by Adongo Kyalo.
