Kenya Revenue Authority (KRA) Deputy Commissioner Maurice Oray puzzled Kenyans with his justification for the proposed Motor Vehicle Tax in the Finance Bill 2024.
While appearing on Citizen TV on Wednesday June 6, Oray struggled to defend the motor vehicle tax proposal where he faced tough questions from the journalists, particularly about the necessity and fairness of the proposed tax.
Oray while presenting his points stated that the new taxes that have been brought in, the motor vehicle tax, the eco-levy, the removal of certain exemptions is basically to address the issue of tax-base expansion.
Sam Gituku, one of the hosts, countered Oray, “Are you saying that people who have motor vehicles don’t pay tax? How many who own motor vehicles and don’t pay taxes are you planning to target?”
However, in his attempt to clarify the controversial tax proposal, Oray ended up contradicting himself stating, “Somebody who has a vehicle definitely has a source of income, but not everybody who owns a motor vehicle is paying taxes, and that brings us to a tax regime that basically addresses such areas.”
Gituku quickly interrupted, pointing out the existing tax on fuel that all motorists pay. “When they fuel their cars, they are paying taxes on fuel, aren’t they?” he asked.
“I meant tax on income. That is a consumption tax. The income that you got to pay for that fuel should have been taxed,” Oray responded.
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KRA Deputy Commissioner Struggles to Explain Motor Vehicle Tax
Oray was further pushed to clarify on the potential double taxation of individuals who already pay income taxes such as PAYE and an addition of the motor vehicle tax.
In his response, he remarked that if only people who earn income are taxed, the government will be forced to increase taxes on them to compensate for motor vehicle owners who do not pay taxes.
“That is actually the main area of discussion. If we were to go for those people who are earning salaries only, to get the level of tax that will boost our economy, it means we have to increase taxes to compensate the other person who has a car but somehow, he manages not to pay,” Oray responded.
Subsequently, he was also tasked to provide answers on how the proposed motor vehicle tax in the Finance Bill would differentiate between those who already pay taxes and those who evade them entirely.
“When the person who has a car pays motor vehicle tax, he will actually be in the tax radar and using our systems we can follow this.
“People might be having income or expenditure related to their earnings but when you go to their tax declaration, you find they are not declaring anything,” he explained.
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“These people are not only motor vehicle owners. There are certain people in business who are also difficult to tax. What the tax policy would require is that we have a presumptive tax. The presumptive tax may be based on an asset.”
John Mbadi Puzzled by Maurice Oray’s Response
John Mbadi, the Chairman of the National Assembly Public Accounts Committee and a Nominated lawmaker, highlighted that the jumbled answers from the KRA Deputy Commissioner demonstrated the taxman’s and the ruling regime’s lack of understanding on how to grow Kenya’s tax base.
“I am shocked that someone who is very senior in KRA, his understanding on the tax base is so wanting. How would you say that motor vehicle tax is going to target those who are not paying taxes as at now?” He posed.
“When you purchase a motor vehicle, over 40% of its value is tax. In using that vehicle, we pay a lot of taxes and even in maintaining it there are a lot of taxes.”
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