Government Introduces New Tax to Kenyans

The Kenyan National Treasury has put forth a novel proposal in its Medium Term Strategy for the Financial Years 2024/2025- 2026/2027.

They intend to introduce a Motor Vehicle Circulation Tax, labeling it as a wealth tax, which will be tied to acquiring an insurance cover for a vehicle.

This tax, to be paid annually, will kick in once individuals gain full ownership of their vehicles.

Under this scheme, all motor vehicle owners will be subject to a minimum tax, with the amount varying based on the engine capacity of the vehicle. Simultaneously, this tax will run alongside the carbon tax, another initiative in the works.

The carbon tax is aimed at increasing tax revenue by targeting vehicles that use fossil fuels, given their contribution to air pollution.

In an effort to combat environmental damage and health concerns stemming from vehicle emissions, the government is planning to incrementally impose this tax on imported vehicles.

Not limited to automobiles, the carbon tax will encompass all machinery reliant on fossil fuels, including tractors, forklifts, excavators, and earthmovers. This comprehensive approach aligns with the government’s commitment to addressing environmental issues and promoting cleaner energy alternatives.