On the 1st of December last year, the government rolled out an excise duty on goods including secondhand cars.
The implementation of the new tax on the imported secondhand cars really affected the business for those who buy and sell used cars.
Most retailers cancelled their orders abroad as buyers shunned away from purchasing the cars as a result of the skyrocketing of the prices.
The majority of the middle class in Kenya buy secondhand cars and the alteration of the prices as a result of the new tax hit hard on them.
The new excise duty increased the price of small secondhand vehicles but interestingly cut the cost of luxurious cars by a total of up to 1.27 million shillings.
At the moment, according to the new law, the duty on a small Toyota Vitz has been increased by 92 percent from 180,069 shillings to 345,842 shillings.
The new duty on Toyota Belta is 98,001 shillings that for Toyota Premio is 124,000 shillings while the duty for Honda Fit is 145,291 shillings.
The most interesting feature to note is that the duty for Range Rover has been cut by 523,999 shillings, Toyota Land cruiser cut by 344,000 shillings and that of Mercedes Benz cut by 1.27 million shillings.
Before the new law took effect, car importers used to pay only 20 percent of the vehicle’s value but at the moment, for instance, an imported car which is more than three years will have to attract a total of 200,000 shillings while those imported cars that are newer will attract a fee of 150,000 shillings as duty.
The new excise duty was imposed on various goods including water and most households in Kenya have been adversely affected.
The water that used to cost 20 shillings for instance, it currently cost 30 shillings this being a 10 shilling increase as excise duty.
Economic analysts have projected the increase in the inflation rate especially with the pressure that continues to be mounted on the shillings against the dollar.
Article by Juma Fred.