Kenya’s luxury car buyers are feeling the pinch of high excise taxes on fuel guzzlers according to the latest data from the motor industry.
Stats show that those buying luxury cars have had to buy up to 2.5 million shillings more than it was before the implementation of the taxes.
With the new excise duty, prices of both used and new cars have increased tremendously. The cost of an eight-year-old car and others within the same category has increased by hundreds of thousands with guzzlers increasing by millions of shillings.
According to stats, the excise duty for a 2.5-liter diesel engine and a 3 liter petrol0engine rose by 10 percent to 30 percent from the usual 20 percent.
Eight-year-old diesel-powered Toyota Land Cruiser is up by more than 250,000 with new ones having gone by more than 2 million shillings. For instance, a Range Rover SE running on diesel is up by 2 million shillings while a Mercedes Benz C350 with a 3,500 cc engine is up by 167,397 shillings.
The government hopes to use the new taxes imposed on motor vehicles to collect revenue for the ongoing financial year but sellers say that the move has affected the demand, especially for the top of the range vehicles.
A Range Rover Autobiography is now retailing 40 million shillings, an increase of 2 million from between 37 and 38 million shillings initially. An eight-year-old Toyota Land Cruiser is now retailing at 1.6 million shillings, up from 1.4 million shillings.
According to the government, the move to increase excise duty on top of range vehicles is to make the rich pay more saying that the new taxes put in consideration on the earnings and tastes of different people.
The government opted to tax Kenyans as a way of reducing both domestic and foreign borrowing following concerns from the International Monetary Fund (IMF) and the World Bank.