Wednesday, September 13, 2023 – National Treasury Cabinet Secretary Prof. Njuguna Ndung’u has proposed introducing a Motor Vehicle Circulation Tax which will target Kenyans buying cars at the point of acquiring an insurance cover.

In the Medium-Term Strategy for the Financial Years 2024/2025- 2026/2027, President William Ruto’s government said the levy, which will be classified as a wealth tax, will be paid annually.

According to Prof. Njuguna Ndung’u-led Ministry, Kenyans will start paying the tax once the buyer gains full ownership of the vehicle.

“The tax will be paid annually by motor vehicle owners at the point of acquiring an insurance cover,” the MRTS read in part.

The government noted that there will be a minimum tax amount payable by all motor vehicle owners.

Further, the amount levied will be increased or decreased based on the engine capacity of the vehicle.

The motor vehicle circulation tax will be levied concurrently with the carbon tax.

The government is considering implementing a carbon tax that would be levied based on the carbon content of fossil fuels in order to boost tax revenue.

Since motor vehicle emissions contribute to air pollution, the government will increase taxes on vehicles that use fossil fuels.

“This is to address environmental damage and negative health effects,” the MRTS explained.

Treasury explained that the carbon tax would be phased over the strategy on imported vehicles.

Apart from vehicles that use fossil fuel, the carbon tax will also encompass all machines that use fossil fuel like tractors, forklifts, excavators and earthmovers. 


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