One of the bold declarations by Finance Minister Amos Kimunya in his maiden budget speech was a proposal do away with road licenses, and the tax from these would now be recovered by an immediate 3 shilling increase in the price of fuel.
The move was probably targeted at rural areas where cars and farm vehicles without licenses or insurance are driven on remote roads and the only way the government can tax them is though taxing their fuel.
But in urban areas it is a different story where price of fuel has already jumped by between 3 and 4 shillings at the pump e.g. from 76 to 80 shillings per litre. My scenario: Earlier this year I paid for my car road license, which cost 2,500 and it, is unlikely that we motorists will be refunded. My fuel bill last month was 5,020 shillings ($70). The new increase of 4 shillings a litre translates to about a 5% increase and my fuel bill will rise to about 5,284. Over the next 12 months, I will pay 3,420 more – which is 1,000 shillings (36%) more than the license fee I paid in January.
Also I drive a popular small engine 1,600 cc car and my daily commute to work is a very low 3 kilometres that takes about of 15 minutes. For other transporters and commuters the cost will be much greater and we have been told severally that oil price increase in the Middle East translate into higher local fuel & transport costs and inflation across all sectors. Now the government has straight up added 5% to the petrol and diesel cost from which it already extracts a healthy percentage.
The proposal should be rescinded because it will not stimulate growth in the economy. I don’t expect the proposal to be sustained because the police, KRA, and insurance companies are likely to complain about the new directive. By looking at the documentation required to renew a license, it is likely that some motorists will stop paying insurance, while others will find it easier to evade taxes on cars in Mombasa or in transit through Kenya. Also the police (who are sometime a nuisance) will have no reason to inspect suspicious (non-Artur) vehicles on the road - which may ultimately result in higher crime.
9 comments:
I was wondering about those that have already renewed their road licences for the year do they get a discount on the increase? (they should to cover the kes3.20 per litre)
Reducing the rates by 50 per cent may have had some effect then the fuel goes up by kes1,60, no idea if that is feasible.
Dave: Getting a road license, once a year, however bureaucratic the process, is still better than paying a higher tax for no reason.
The Rant: Many Kenyans walk to work because they can't afford to take numerous bus trips to get to work. But, riding a bicycle is extremely dangerous as there are no designated cycle paths in the city (yet)
Prousette: no plans for a refund and don't expect one.
Hey there!It's been a long time since I was here.I see the common mwanainchi is hamorraghing money until it isn't funny at all!
I wonder how long it will take for petrol to hit the 100/= mark!Pole sana!
This is the wrong move for a country struggling to maintain economic growth. We cannot afford to increase the cost of transporting goods and providing services more than it already is.
On the other hand, I realise why this sort of move may be necessary given these license dodgers, but all it will do is enrich the government at the expense of the consumer.Where does that money go? Better roads? Maybe we will see the benefits in time in our road network. That is how it works in the US, the 18.3 cents gas tax keeps the roads maintained of course the gas goes for 1/4 of the cost in Kenya. If so, I am all for this.
No one likes to pay taxes, but is the system so inefficient that it needs a face lift? I don't know whether Kimunya's budget proposal will close the loopholes for those evading taxes, but this sounds more like the government subsidizing for inept administrations like the police. I wonder if this proposal mentions downsizing the police force?
If Kimunya's goal is to prevent tax evaders, he should look into overhauling the current system in such a way that it is more equitable for all. And not just giving a bandage solution.
You my dear have just been tagged....mwahhahaahaaa (evil laughter!!)
Kimunya was trying to increase the resources available for Kenya's development agenda without relying on donor funding and that would probably explain why the drastic measure.
However, the pain that we drivers will have to bear and subsequently every kenyan who utilises any factory manufactured goods or ingredients will have a serious problem adjusting.
Banks, why do you think the proposal won't go through?
I think it's a great law although we should adopt a wait and see attitude. Lets see how the govt does with repairing the roads.
The govt has gotten over the headache of one corrupt office and depending on how high the collection is we could hope for a reduction in this tax.
It wont be unfair, if we see improved condition of the roads and better traffic management as drivers enjoy longer lasting cars and the high depreciation, the vehicle downtime and accidents caused by potholes and bad roads could be no more.
Acolyte: If fuel hits a hundred, politicans will notice.
matu & chumviKiasi: Yes everyone shouldl have a license - but the number of evaders is miniscule compared to the tens of thousands of honest innocent car owners who are being penalized. Hopefuly the proposed new by the roads ministry will give a detailed account of how funds are spent
Matu: we ned more policemen, but they should fight crime - not spend the whole day at roadblocks collecting bribes or doing traffic.
Kagz: KRA has outsourced VAT and other tax collections to some banks, but road licenses may be too sensitive. Agree the number of people who walk to work (rather than pay 20/= per each matatu trip) is shocking - buses should be allowed to have standing passengers again.
kipepeo; let me see ...
Dave: I'd like to see where the road levy we have been paying for years went before i coulgh up more cash.
Kibet: proposal means more Artur's on the road & more junks without insurance
Ken: the transport sector is still a mess. And we motorists have such bad habits and are not helping matters with our poor driving.
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