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Murkomen opposes EVs tax plan, says it will reverse gains

Business
 Transport Cabinet Secretary Kipchumba Murkomen. [Boniface Okendo, Standard]

Roads and Transport Cabinet Secretary Kipchumba Murkomen has opposed introducing taxes in the electric transport sector as proposed in the Finance Bill, 2024.

The Bill proposes various changes to the incentives introduced under Finance Act, 2023, including removing the tax incentives on electric vehicles (EVs).

It proposes that the supply of electric bicycles, solar and lithium-ion batteries and electric buses of tariff heading 87.02, which are currently zero-rated would be subjected to Value Added Tax (VAT) of 16 per cent.

“The removal of the incentives introduced in 2023 not only undermines the potential for further EV adoption but also risks stalling the momentum gained in recent years,” said Mr Murkomen on Tuesday when he appeared before the National Assembly’s Finance and National Planning Committee.

He added: “An environment conducive to growth is essential, given that the global transition to cleaner transportation aligns with Kenya’s sustainability and carbon reduction commitments.” 

The CS said without supportive policies, the country may miss a critical opportunity to become a leader in Africa’s electric mobility landscape, thus potentially limiting the reduction of greenhouse gas emissions and slowing down progress towards a greener economy.

According to figures, the transport sector contributes to over 30 per cent of carbon emissions in the country.

According to the CS, the Vehicle Registration Statistics as of 2023 show that 2,128 EVs had been registered by the National Transport and Safety Authority (NTSA).

In the last year, the electric mobility industry, he said, has saved over one million litres of fossil fuel imports, among other benefits.

“The adoption of electric mobility has attracted over $100 million (Sh13 billion) in investment, significantly reduced emissions, and ultimately saved consumers 30 per cent to 40 per cent in transport costs. However, this progress is at risk if the proposed taxes are implemented, potentially harming an industry still in its early stages,” said Mr Murkomen.

The government’s Bottom-Up Economic Transformative Agenda (Beta), which is currently being implemented under the Fourth Medium-Term Plan 2023-2027 under the Kenya Vision 2030 Agenda, he said recognises the role that electric mobility could play in the attainment of National Development and Environmental goals.

State visit

The CS said to achieve the current government’s agenda on e-mobility, President William Ruto during his recent State visit to the US outlined the commitment by his administration to eliminate all taxes and duties applicable to the first 100,000 EVs in Kenya.

According to Mr Murkomen, the incentives for the electric mobility sector introduced in 2023, through the Finance Act to incentivise green energy use in the Transport Sector have increased the uptake of EVs with numerous start-ups setting up in Kenya.

He said the government intends to adopt policies that will foster a more conducive business environment for e-mobility companies. 

Mr Murkomen said unbridled taxation on electric vehicles can hinder their adoption for several reasons, including becoming a cost barrier, incentive reduction, environmental impact, technological progress and market growth.

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