Spare hard-pressed road users further tax pain

A Section of Nairobi Expressway toll stations at Capital Centre along Mombasa road. [Elvis Ogina, Standard]

In yet another bid to extract more money from Kenyans, the government last week increased the Petroleum Regulatory Levy from Sh0.25 per litre to Sh0.75.

Not content, the government also has plans to introduce yet another levy, adding to the bevy of taxes that motorists already have to contend with amid high fuel costs in the country. The proposed Motor Vehicle Circulation Tax will most likely come into effect in the 2024/2025 Financial Year if the Budget Policy Statement 2024 gets Parliament’s nod. This, and the plan to charge motorists for using certain roads, will further increase the cost of travelling on Kenyan roads.

It is not in doubt that the government needs money to operate and to pay the country’s huge debt. However, Kenyans are already reeling under the weight of the more taxes introduced by the Kenya Kwanza government. Further, the majority of Kenyans are still feeling the economic pinch occasioned by the effects of Covid-19 and the Russia-Ukraine war. Additional taxes are the proverbial last straw that broke the camel's back. Excessive taxation is tantamount to killing the goose that lays the golden eggs. 

Motorists are burdened by high fuel prices that Kenyans believe do not reflect global prices, something the government has been at pains to explain. Last year when the government increased VAT from 8 per cent to 16 per cent and drove fuel prices through the roof, most people opted to leave their cars at home which resulted in less fuel sales, and by extension, less revenue. In the end, the increase in prices failed to solve the problem it sought to address. The government is likely to fetch even lesser revenue from road users if it goes ahead with its plans.  

The government’s appetite for tax is not good for development, neither will it get the hustlers out of the economic rut that they are in. When workers’ take-home is a fraction of their earnings, it kills morale and production. No country has ever developed by the sheer strength of hefty taxes, a reality those in government now must acknowledge.

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