Environment levy to raise price of buying, driving cars
The state is eyeing a gradual rise in the excise duty on cars running on fuel and also introducing an annual wealth tax for car owners depending on the engine capacity. FILE PHOTO | POOL
Prices of buying and operating vehicles will rise if the government implements proposed taxes on wealth and protection of the environment.
The State says in the draft medium-term tax revenue strategy that it is eyeing the introduction of a gradual rise in the excise duty on cars running on fuel and also introducing an annual wealth tax for car owners depending on the engine capacity.
The Treasury says the government will assess the viability of introducing motor vehicle circulation tax 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,” says Treasury.
In a move to encourage a shift to green cars, the State is also eyeing a gradual increase of excise taxes on imported vehicles that use fossil fuels as part of curbing air pollution.
The rise in import taxes on fossil vehicles will be alongside a possible downward review of electric vehicles’ taxation to support the switch to a green economy.
The latest proposals add to that made in January’s draft National Green Fiscal Incentives Policy Framework to start charging motorists to drive into heavy traffic cities.
Under the plan, the State will explore the introduction of a congestion charge — a fee charged on cars and motor vehicles being driven within zones marked as heavy traffic areas— as it happens in countries such as the UK.
The State has not proposed the level of charges but says such a move, which is likely to target roads in Nairobi, Mombasa, Kisumu and Nakuru, will help to cut carbon emissions.
