Kenya’s government plans to introduce additional taxes to raise Sh230 billion for road development, maintenance, and rehabilitation.
Tough times for motorists as the Ministry of Transport has proposed new taxes and levies.
New Road Taxes and Levies
They include:
- Reintroducing car insurance premium tax
- Implementing a congestion levy
- Increasing the fuel levy
- Introducing road tolls under the National Tolling Policy
1. Car Insurance Premium Tax: The Kenyan government is looking to reintroduce a tax on car insurance premiums. This measure aims to shore up revenue for road construction and maintenance amidst declining fuel tax collections.
2. Congestion Levy: A new congestion levy is set to be implemented, targeting traffic in major cities to manage flow and fund infrastructure projects. This follows a trend seen in other global cities aiming to reduce urban congestion.
3. Fuel Levy Increase: There is a proposal to increase the fuel levy, which has been a significant source of funding for road maintenance. This comes after a previous reduction in the levy rate led to a shortfall in the expected revenue.
4. Road Tolls under National Tolling Policy: The introduction of tolls on major highways is part of the National Tolling Policy. This move is intended to finance the development, maintenance, and rehabilitation of roads, with tolls expected on new and upgraded road networks, particularly those developed via Public-Private Partnerships (PPPs).
The Ministry of Transport has confirmed the proposal, which was previously shelved after the Finance Bill, 2024 was withdrawn following public protests.
The draft policy includes a fuel levy increase, the introduction of road tolls and a pollution tax, citing a funding shortfall in road infrastructure.
Motorists could pay 2.5 percent of their vehicle’s value as a tax on insurance premiums, with a minimum charge of Ksh 5,000 and a maximum of Ksh 100,000.
Urban centres like Nairobi, Mombasa and Kisumu are expected to be targeted for congestion charges, similar to London and New York.
The policy outlines 12 vehicle classifications for tolling, with charges based on maintenance costs, alternative routes and travel time saved.
These measures are part of a broader strategy to raise Sh230 billion, reflecting the government’s commitment to enhancing Kenya’s road infrastructure despite the potential financial burden on motorists.
The introduction of these taxes and levies has sparked discussions on the balance between funding needs and affordability for the populace.
