Nairobi — The government has removed the 2.5 percent proposed levy on motor vehicles in a move to drop the contentious proposals from Finance Bill 2024.
Finance and Planning Committee chairperson Kimani Kuria in an address to the press stated that the earlier proposal to introduce the wealth levy would make the insurance industry unsustainable and hence slowed down revenues from the government.
"We have agreed that the motor vehicle tax cannot be amended through an Income Tax Act and pegging it on insurance would cripple the insurance business and make it difficult for Kenyans taking third-party insurance," said Kuria.
Earlier, the government had retracted the Sh100,000 cap for motor vehicles in a move that would have seen motor vehicle owners pay upward of Sh400,000 in the proposed wealth tax.
The proposal meant that vehicle owners would have been taxed based on the current market value of their vehicles.
The minimum annual tax payable was earlier capped at Sh5,000, ensuring that even lower-valued vehicles contribute to the nation's revenue according to Treasury Cabinet Secretary Njuguna Ndung'u.
"To expand the tax base and make our country self-reliant, I propose to introduce an annual motor vehicle tax at the rate of 2.5% of the value of the vehicle subject to a minimum amount of Sh5,000 per annum," he said.
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