The government has an ambitious plan to raise revenue to fund its budget through various tax initiatives.
Key among the tax proposals that the government is considering introducing are taxes targeting vehicle owners. Notably, one of the proposals suggests that car owners pay annually.
Kenyans.co.ke details vehicle taxes the Kenya Kwanza administration is mulling over.
Motor Vehicle Circulation Tax
This is a wealth tax that will be imposed on all vehicle owners. The tax rates will be implemented at a flat rate in addition to another rate that will be charged based on the engine capacity of a vehicle.
Therefore, cars with higher engine capacity could pay more in taxes.
Notably, the government, in its Medium Term Revenue Strategy (MTRS) states that it is considering having the tax imposed annually.
"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," reads the strategy document.
This tax is proposed to be implemented between the 2024/2025 and the 2026/2027 financial year.
Carbon Tax
On the other hand, as the government prioritises plans to mitigate climate change, it is also aiming to align its plans with taxation policies.
Under this proposed tax plan, the government will increase Excise Duty for vehicles that run on fossil fuels - Diesel and Super Petrol.
Electric vehicles will be exempted from this tax plan.
"The following will be evaluated within the scope of 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.
"Also, the government will evaluate the introducing excise on other equipment that uses fossil fuel tractors, such, as tractors forklifts, excavators earthmovers," the strategy document read in part.
Equally, Carbon Tax is projected to be implemented between the 2024/2025 and the 2026/2027 financial year.
Toll Roads
Another strategy the government is keen on implementing is the rollout of toll stations on newly constructed roads.
In this strategy, motorists will be required to pay some fees to use some roads just as practised currently on the Nairobi Moja Expressway.
Some of the roads planned to have toll stations include the dual Nairobi-Mombasa Highway, whose construction will begin in the 2026-2027 Financial Year.
As explained, the government is seeking to undertake mega infrastructural projects under the Public-Private Partnerships (PPP) where investors will recoup their money through the toll charges.
"That is the global way of doing it. You may pay that extra Ksh1,000 that you would have used on fuel when there is a jam. You will probably save Ksh3,000 in fuel costs because you will get to Nairobi much faster," Murkomen stated during an interview in 2023.
