The state’s recent proposal to introduce excise duty on imported electric motorbikes, other than motorcycle ambulances, contradicts its recent policy promoting e-mobility.
This proposal, part of the Finance Bill 2024, aims to amend Part 1 of the first schedule to the Excise Duty Act, removing excise duty on petrol engine motorcycles.
This move comes just nine months after President William Ruto launched electric bikes in Mombasa to accelerate e-mobility adoption.
Currently, electric motorcycles, priced at Sh150,000, are exempt from excise duty, serving as an incentive to empower youth by reducing operational costs in the ‘boda boda’ industry.
Fred Omondi, a partner at Deloitte accountancy firm, expressed concern over the apparent shift in agenda regarding the taxation of electric bikes.
“The government is promoting environmental protection so ideally the incentives should cater to electric vehicles and motorcycles as opposed to petrol motorcycles,”said Omondi.
The Deloitte 2024 Budget Analysis report deemed the decision by the government counter effective as this would lower the demand for electric bikes.
“The proposal to remove excise duty on petrol powered motorcycles may increase the demand on petrol motorcycles and derail the Government’s policy on electric motorcycles,”said the report.
The latest data from the Clean Air Fund report highlights that transportation accounts for 40 percent of pollution in Nairobi, with biomass fuels contributing another 25 percent.
This underscores the urgent need to find solutions to curb air pollution caused by automobiles, particularly in large cities like Nairobi, which has a population of 4.3 million according to the 2019 census.
Furthermore, the proposed amendment to the excise duty on motorcycles in the bill suggests a shift from a specific rate of Sh12,952 per unit to a new rate of 10 percent of the motorcycle’s value per unit.
This change will result in a significantly higher tax rate, making it more expensive for taxpayers to access higher quality motorcycles.
According to the 2024 Economic Survey, the value of principal imports of motorcycles and bicycles declined by 53.1 percent to Sh645,180 from Sh1,376,670 in 2022. This decline was attributed to a deterioration in daily unit profitability, leading to reduced demand levels.
However, there is some relief for petrol users as the Energy and Petroleum Regulatory Authority has announced a drop in fuel prices. Petrol will now be priced at Sh189 per litre, while Diesel and Kerosene will be available at Sh173 and Sh163 per litre, respectively.
