Kuria Kimani, the MP for Molo Constituency and chair of the National Assembly Finance Committee, defended the government’s proposal to levy car owners through a motor vehicle circulation tax. The new Finance Bill 2024 suggests an annual tax to be paid when acquiring motor vehicle insurance. This tax will be at least Ksh.5,000, equating to 2.5 percent of the vehicle’s value.
Kimani described the levy as “a hybrid of income and wealth tax.” He explained that the move aims to encourage investment in a comprehensive local public transport system. He emphasized that this approach would promote the development of a robust public transport infrastructure.
“If you go to economies ahead of us, there are elaborate and very efficient public transport systems,” the MP told NTV in an interview.
“Every time investors want to invest in our public transport system through public-private partnerships, the feasibility studies show that we like to drive our cars so much that we are not able to attract foreign investment.”
He argued that 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 avoid using cars.
And while the motor vehicle circulation tax will be tied to the annual renewal of insurance policies, Kimani claims Kenyans have an option of not paying it – by not using their cars altogether.
“If you don’t want to pay the motor vehicle circulation tax, then don’t use the car, like how you don’t use the expressway if you don’t want to pay for it,” he said.
According to the bill, ambulances and government-owned vehicles are exempt from the motor vehicle circulation tax, as outlined in the Privileges and Immunities Act.
If an underwriter fails to collect and remit the motor vehicle tax within five working days after issuing motor vehicle insurance cover, they will face a penalty. The penalty is fifty percent of the uncollected tax, plus the actual amount of the uncollected tax.
