Used cars dealers have asked the government to introduce uniform environmental degradation levy to all motor vehicles and exclude them from impending Excise Duty Bill.
This follows an attempt by the government to slap huge taxes on imported second hand vehicles through the Excise Duty Bill 2015.
Car Importers Association of Kenya Chairperson Peter Otieno said that if the bill is signed into law, the number of car imports will likely reduce by an estimated 50 per cent from the current 9,000 units per month to 4,500 units.
Mr Charles Munyori, head of Kenya Auto Bazaar Association (KABA) urged the government to work with Kenya Private Sector Alliance (KEPSA) to put a uniform 1.5 per cent environmental levy based on the custom value of all imported cars, whether new or used.
“Government should know that most of the new motor vehicles sold in Kenya are not assembled here but are imported as Fully Built Units (FBU’S) and at the same time the few that are assembled here enjoy duty free completely knocked down kits(CKD’S), that makes used car dealers and new car dealers two different segments,” said Mr Munyori.
BLANKET TAX
Treasury Cabinet Secretary Henry Rotich said the bill is scheduled for discussion in Parliament this week.
As part of the plans to raise revenue for the Sh2.1 trillion budget, car buyers will bear a blanket tax based on a vehicle’s age to replace the current calculation, which relies on its estimated value.
The levy will include Sh200,000 excise tax on all vehicles more than three years old from the date of first registration and Sh150,000 for newer vehicles.
He added that the tax will affect revenue by the National Transport and Safety Authority (NTSA), Kenya Ports Authority, Container Freight Stations, insurance companies and the public at large.