The Motorists Association of Kenya has announced that it will be holding a protest in Nairobi Central Business District (CBD) on Friday, May 24.
In a letter to the National Police Service (NPS) of the Nairobi Central Police Station, the association indicated that the protest will be held as a show of opposition to proposed taxes on the Finance Bill 2024.
Specifically, the motorists will be protesting against the introduction of a Motor Vehicle Tax, levied at 2.5% of a vehicle’s market value if the Bill is passed as is.
Additionally, the letter detailed that the protest which will have about 100 people, will take place along the Aga Khan Walk between Kenya Re and Kenya Power between 10:00 am to 11:00 am.
“We hereby notify you of a peaceful protest against the 2.5% proposed motor vehicle tax that will be effective from July 1 2024 if it is approved and becomes law.
“The protest will take place on Friday the 24th May 2024 Aga Khan Walk between Kenya Re and Kenya Power between 10:00 am to 11:00 am. We’ll have around 100 people. It will be a peaceful protest with decorum,” the statement read in part.
Also Read: Then Don’t Own a Car: Ruto Insider Tells Off Kenyans Opposing Motor Vehicle Tax
Details of the Proposed Tax on Motorists
If the Bill is approved without amendments, Kenyan motorists will be required to pay the motor vehicle circulation tax to the Commissioner while obtaining an insurance cover.
The tax would be calculated based on the value of the vehicle and will be determined by factors such as its make, model, engine capacity, and year of manufacture of the vehicle.
Moreover, this means that a person who buys a car worth Ksh1 million will be expected to pay the government Ksh50,000 every year.
At the same time, a fifty percent penalty of the uncollected tax will be imposed on insurers who fail to collect and remit the tax.
“Insurers who fail to collect and remit the tax would be subject to a penalty equivalent to fifty percent of the uncollected tax, in addition to paying the actual amount of the uncollected tax,” the proposed bill read in part.
Also Read: Motor Vehicle Tax: Inside Ruto’s Plan to Add More Levy to Car Owners
Manufacturers and Insurers Reject the Proposal
Earlier, the Association of Kenya Insurers (AKI) said that the tax will increase the cost of motor insurance whose premium rate already stand at 5 per cent for comprehensive covers.
Therefore, the 2.5 per cent taxation will mean that the premium will hit 7.5 per cent, which the insurance providers indicated will lead motorists to opt for third-party insurance covers to adjust to the rising living cost.
“With motor vehicle insurance being compulsory in Kenya, we anticipate a major shift towards third-party motor insurance if this tax is implemented. Consequently, motorists will face higher risks, as they will essentially only be covered for third-party liabilities, leaving their vehicles unprotected in the event of accidents,” AKI executive director Tom Gichuhi stated.
However, on May 15, the National Assembly Finance Chair Kimani Kuria told off Kenyans opposing the proposal, arguing that the country would benefit greatly from the tax.
While he received backlash from Kenyans for his remarks, Kuria insisted that the tax will encourage investment in public transport and minimize the use of private cars.
“The long-run impact of this will be to encourage investment in elaborate public transport. If you go to economies that are slightly ahead of us there is efficient and elaborate public transport,” he said.
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