The government is exploring the possibilities of enhancing its taxation policies on vehicles that run on fossil fuels such as Diesel and Super Petrol.
In the Medium Term Revenue Strategy report compiled by the Treasury, it was highlighted that the government will be looking at introducing a form of Carbon Tax on these vehicles.
Treasury indicated that the taxation will be done through increasing excise duty on imported vehicles that use fossil fuel.
According to the plan, the increase in excise duty will be done gradually within the targeted period in the upcoming Financial Year - 2024/2025 through to 2026/2027.
Additionally, Treasury documented that the government would also explore introducing taxation on earth movers given the harmful gases that are emitted into the environment through their use.
"Motor vehicle emissions contribute to air pollution which also has significant health effects. The following will be evaluated within the scope of a carbon tax including a gradual increase of excise taxes on vehicles that use fossil fuels to address environmental damage and negative health effects. The increase will be phased over the strategy on imported vehicles.
"There will be an evaluation of introducing excise on other equipment that uses fossil fuel tractors, such, as tractors forklifts, excavators earthmovers, etc," read the report in part.
However, the exact rates to be effected in the excise duty review are yet to be known.
Conversely, in a bid to promote the uptake of environment-friendly vehicles, the government will also review taxes on electric vehicles.
The Impact
Should the government implement the taxation strategy, buying and owning vehicles will become more expensive given that there are plans to introduce other taxes on all vehicles in the country.
Notably, one of the taxation measures that will be undertaken alongside the Carbon Tax is the Motor Circulation Tax, which is a form of wealth tax.
"The Government will assess the viability of introducing Motor Vehicle Circulation Tax in the medium term as a form of a wealth tax. The tax will be paid annually by motor vehicle owners at the point of acquiring an insurance cover.
"There will be a minimum tax amount payable by all motor vehicle owners in addition to a graduated amount based on the engine capacity of the vehicle," read the strategy report in part.
