Economy

Parliament blocks new motorbike tax

boda

Many Kenyans have embraced the boda boda business as it is cheaper to start. FILE PHOTO | NMG

Parliament has blocked the government’s attempt to raise motorbike taxes to 15 percent of the value of a unit from a fixed charge of Sh11,608.

MPs rejected the new tax stating it would negatively impact the boda bodas, a popular means of transport.

The Treasury push would have seen motorcycles above Sh77, 386 attract higher taxes, hitting the transport sector that relies heavily on the bikes.

“The proposal will increase the price of motorcycles and, therefore, negatively affect the bodaboda industry.

“In view of that the committee rejected the proposal in the Finance Bill 2021,” said the Finance Committee.

While reading this year’s Budget, Treasury Cabinet secretary Ukur Yatani announced new taxes on motorcycles effective July 1.

He introduced the 15 percent excise duty on motorcycle units would help bridge the budget deficit in excess of Sh700 billion.

Currently, they attract an excise duty of Sh11,608 per unit other than motorcycle ambulances and those that are locally assembled.

However, with the new taxes, for instance, a unit of motorbike that cost Sh141,000 would have attracted a levy of Sh21,150 under the new tax.

The new charges also put pressure on the sectors amid tough economic conditions caused by the coronavirus that has disrupted operations.

Many Kenyans have embraced the boda boda business as it is cheaper to start, requires fewer regulations to start besides supporting millions of families.

Economic Survey 2020 showed that bodabodas and tuk-tuk registration in the past year rose by 22,172 units, defying tough economic times that hit most Kenyans, indicating its dominance in the economy.