KuriaKimani, the MP for Molo Constituency and chair of the National Assembly Finance Committee hasdefended the government’s proposal to levy car owners through a motorvehicle circulation tax.
The tax putforward in the new Finance Bill 2024 seeks to introduce an annual tax thatwill be paid during motor vehicle insurance cover acquisition.Setat a minimum of Ksh.5,000, the levy will be 2.5 per cent of the vehicle’s value.
Kimani, whodescribed the levy as “a hybrid of income and wealth tax” on Tuesday said themove is meant to encourage investment in what he described as an elaborate local public transport system.
“If you goto economies ahead of us, there are elaborate and very efficient publictransport systems,” the MP told NTV in an interview.
“Every timeinvestors want to invest in our public transport system through public-privatepartnerships, the feasibility studies show that we like to drive our cars somuch that we are not able to attract foreign investment.”
He arguedthat Kenyans like using cars because the public transport system is not “elaborate”and if Kenyans were to be presented with a better alternative, they would avoidusing cars.
And whilethe motor vehicle circulation tax will be tied to the annual renewal ofinsurance policies, Kimani claims Kenyans have an option of not paying it – by notusing their cars altogether.
“If you don’twant to pay the motor vehicle circulation tax, then don’t use the car, like howyou don’t use the expressway if you don’t want to pay for it,” he said.
Per the bill,ambulances, and government-owned vehicles are exempt from the motor vehiclecirculation tax as stipulated in the Privileges and Immunities Act.
Failure to collectand remit motor vehicle tax within five working days after issuing of motorvehicle insurance cover, an underwriter shall be liable to a penalty of fiftyper cent of the uncollected tax and the actual amount of the uncollected tax.
