A rise in excise duty on cars with engine capacity of 2.5 litres for diesel and three litres for petrol led to a serious spike in prices of luxury cars in Kenya.
In September, the tax was raised to 30 percent from 20 percent forcing vehicle dealers to raise their final sale prices.
Now, prices of various cars are up by millions as dealers complain that the tax is hurting their businesses.
For instance, you will have to part with Sh2 million more to acquire a new Range Rover with a five-litre petrol engine or a Range Rover Sport model with a three-litre diesel engine.
The vehicles now come with an import duty of 25 per cent, excise duty of 30 per cent and valued added tax of 16 per cent.
The price of a used eight-year old Land Cruiser is up by around Sh250,000.
For a Mercedes Benz C350 with a 3.5 litre diesel engine, you will pay Sh167,397 more in taxes.
A Nissan Patrol with a 3.0 litre Petrol engine, on the other hand, costs Sh 175,290 more.
A Volkswagen Touareg now attracts an estimated Sh155,000 more in taxes.
“To ensure progressivity, which is a cardinal principle of taxation, I propose to increase excise duty from 20 per cent to 30 per cent on private passenger motor vehicles whose engine capacity exceeds 2,500cc for diesel and 3,000cc for petrol-powered vehicles,” Treasury CS Henry Rotich when proposing the rise.
