Boda bodas, used cars likely to be targeted by a new tax

Boda boda operators resting on their motorcycles at the shell gas station in Section 58 on April 4, 2022, as they wait their turn to refuel. [Harun Wathari, Standard}

Cabinet Secretary Ukur Yatani’s hidden ‘sin tax’ measure is likely to hit importers of boda boda motorcycles and secondhand cars  in a move aimed at raising an additional Sh50.4 billion.

In his Budget Speech on Thursday, Yatani noted that he had tabled in the National Assembly the Finance Bill 2022, a proposed law that outlines how the government will raise revenues in a given financial year.

The Bill, the CS said, contained a new tax measure where excise duty, popularly known as the sin tax, for various items would be increased by 10 per cent.

This is likely to have an impact on the prices of certain items, including imported motorcycles and used cars.

“Mr. President, in the bill, I have also proposed to increase the specific excise duty rates by 10% for a number of products to generate additional revenue for the government,” Yatani said. , while excluding petroleum products from this increase. , citing the recent global increase in oil prices.

Currently, a motorcycle unit – widely used by boda-boda businesses – attracts an excise duty of 10,000 shillings. If this duty is increased by 10%, a motorcycle will be subject to a new duty of 11,000 shillings.

This could be a double whammy for boda boda operators who may also have to pay liability insurance if Yatani’s proposed changes are enacted.

In the 2021 finance bill, which became the 2021 finance law, Yatani had proposed to increase taxes on imported bread and boda bodas.

However, MPs not only quashed these proposals but also zero-rated value added tax (VAT) on bread, maize flour, wheat flour and cassava flour in what has been hailed as a pro-Wanjiku decision.

Although Yatani, in his budget speech on Thursday, said he had tabled the 2022 budget bill, our team in the National Assembly had not found this vital document at press time.

Other products likely to be affected by the tax increase include excise goods such as mineral water, cosmetics and beauty products, alcoholic beverages, fruit juices, cigarettes and dietary supplements.

Nikhil Hira, a tax expert, noted that he did not know which products were targeted by the new tax hike.

However, he suspects the government may be plundering those products with harmful health effects that have traditionally fallen victim to the sin tax. These include beers and cigarettes.

However, he does not think the government could have hit products such as airtime and financial transactions with the additional sin tax.

Tobacco products were among the unlucky elements of Yatani’s moves to help the Kenya Revenue Authority (KRA) collect 2.14 trillion shillings in taxes.

Liquid nicotine – also known as vapor – which is popular among young people will be hit with an excise duty of Sh70 per milliliter from the current Sh1 per unit.

“These products continue to negatively affect the health of our citizens. The design of these products and their tax regime make them easily accessible to users, including schoolchildren and young people, thus leading to nicotine addiction and, consequently, smoking and other drug use.

Gambling, whose excise duties could also be affected by the 10% increase, was also affected.

Mr Yatani has introduced excise duties on all forms of advertisements for the gambling, gambling and alcohol industry, areas which for the past 10 years have been the cows to President Kenyatta’s tax milk.

Companies that have tax disputes with the Kenya Revenue Authority (KRA) will also be the losers. They will now have to deposit half of the disputed amount in a suspense account at the Central Bank of Kenya (CBK) until their cases are resolved.

Nevertheless, the highlight of this budget is not what is contained in the budget speech, but what the public has yet to get, including budget estimates that various government departments and expenditures will spend.

“In the past, we used to get the finance bill as soon as the speech was ready,” Nikhil said, adding that the document must be made public because there is little time left in parliament before the speech is ready. it is suspended before the elections.

Announcing sweeping fiscal measures at a time when they are currently struggling with a high cost of living could lead to political fallout that President Uhuru Kenyatta’s administration would like to avoid.

Mr. Nikhil noted that manufacturers, who have decried heavy excise duties on products such as juices, candies, sodas and minerals, must now be very scared.

The 3.3 trillion shillings budget that Yatani has not significantly deviated from others over the past 10 years, with a lot of money invested in legacy infrastructure projects, the Big Four Agenda, security and education.

About Natalee Broderick

Check Also

Indonesia imposes tax and VAT on crypto income and purchases at 0.1%

The Indonesian government announced the imposition of an income tax of 0.1% on crypto income …