Motorcycle registrations dropped by almost half in July compared to the previous month due to uncertainty sparked by the State’s unsuccessful bid to raise taxes on motorbikes to 15 per cent of the value of a unit from a fixed charge of Sh11,608.
Data by the Kenya National Bureau of Statistics (KNBS) shows that 20,533 units of motorcycles were listed in July, down from 38,856 in June, representing a 47.15 per cent slump, as buyers adopted a wait-and-see stance on the Treasury’s move.
Motorcycle registrations had risen by a sharp 10,667 units in June compared to May as buyers raced to avoid paying more in line with the Treasury’s tax plan that was set to take off on July 1.
Parliament, however, shot down government’s attempt, stating that, it would negatively affect boda boda, a popular means of transport.
The Treasury push for higher taxes would have seen motorcycles above Sh77,386 attract higher taxes, hitting hard the transport sector that relies heavily on this mode, the Treasury Finance Committee explained.
Budget deficit
While reading this year’s budget, Treasury Cabinet secretary Ukur Yatani announced new taxes on motorcycles, effective July 1.
Boda boda business
He introduced the 15 per cent excise duty on motorcycle units in the hope that, it would help bridge the budget deficit in excess of Sh700 billion.
Currently, motorbikes attract an excise duty of Sh11,608 per unit other than motorcycle ambulances and those that are locally assembled.
However, with the new taxes, for instance, a unit of motorbike that cost Sh141,000 would have attracted a levy of Sh21,150.
Many Kenyans have embraced boda boda business as it is cheaper to start and requires fewer regulations besides supporting millions of families.
The price of motorcycles, however, remains uncertain as Members of Parliament deliberated on freshly proposed tax increases on about 30 products, including bottled water, juice, motorcycles and beer.
The Kenya Revenue Authorities has raised the duty charged on excisable goods, excluding fuel, by 4.97 per cent to cover the inflationary erosion of collected taxes. BY DAILY NATION