19 June 2013

Kenya: Car Importers Oppose Import Tax

MOTOR vehicle importers have opposed the proposed 1.5 per cent railway development tax to be levied on imported goods as contained in the budget.

They now want President Uhuru Kenyatta to intervene to ensure the tax is shelved saying this will push up the cost of imported goods like fuel, wheat, cars, rice, diapers and infant formula.

The tax is expected to give Treasury Sh15 billion towards the construction of a railway line from Mombasa to Kisumu. Last week, National Treasury Secretary Henry Rotich announced in the budget that Sh22 billion will be availed for the construction of a two-track standard gauge railway line.

It is aimed at improving turn-round time at the port of Mombasa and reduce the cost of freight from Mombasa to Kisumu. The Association of Importers of Motor Vehicles in Kenya however is opposed to the move saying importers are already burdened by exorbitant levies in the port.

Speaking in Mombasa yesterday, the association national chairman Peter Mambembe said the funds will increase the cost of business. He said the move will scare away investors and importers especially from neighboring country.

He said importers are already paying a 2.25 percent import declaration License fees, 0.5 percent shipping superintendent levy, 15per cent Kenya Bureau of Standards charges inspection fees and Sh2,000 per vehicle on import radiation fees.

Other charges include storage charges levies, double storage charges to KPA and KRA, uplifts values by KRA and also charged for data base to compute taxes by KRA.

"We are already over burdened by unnecessary charges and taxation. The president should reverse this move. Essential commodities in the market will become expensive as the importer will transfer the cost to the consumer," said Mambembe.

He said the president should also revoke all licenses of private container freight stations operating inside the port to improve port efficiency.

The railway that will be completed in three years is aimed at cutting the transport costs for businesses. According to Rotich, goods used in railway operations may be exempted from paying import duty.

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