One of the bold declarations by Finance Minister Amos Kimunya in his maiden budget speech was a proposal do away with road licenses, and the tax from these would now be recovered by an immediate 3 shilling increase in the price of fuel.
The move was probably targeted at rural areas where cars and farm vehicles without licenses or insurance are driven on remote roads and the only way the government can tax them is though taxing their fuel.
But in urban areas it is a different story where price of fuel has already jumped by between 3 and 4 shillings at the pump e.g. from 76 to 80 shillings per litre. My scenario: Earlier this year I paid for my car road license, which cost 2,500 and it, is unlikely that we motorists will be refunded. My fuel bill last month was 5,020 shillings ($70). The new increase of 4 shillings a litre translates to about a 5% increase and my fuel bill will rise to about 5,284. Over the next 12 months, I will pay 3,420 more – which is 1,000 shillings (36%) more than the license fee I paid in January.
Also I drive a popular small engine 1,600 cc car and my daily commute to work is a very low 3 kilometres that takes about of 15 minutes. For other transporters and commuters the cost will be much greater and we have been told severally that oil price increase in the Middle East translate into higher local fuel & transport costs and inflation across all sectors. Now the government has straight up added 5% to the petrol and diesel cost from which it already extracts a healthy percentage.
The proposal should be rescinded because it will not stimulate growth in the economy. I don’t expect the proposal to be sustained because the police, KRA, and insurance companies are likely to complain about the new directive. By looking at the documentation required to renew a license, it is likely that some motorists will stop paying insurance, while others will find it easier to evade taxes on cars in Mombasa or in transit through Kenya. Also the police (who are sometime a nuisance) will have no reason to inspect suspicious (non-Artur) vehicles on the road – which may ultimately result in higher crime.