Murkomen explains why he opposes taxes imposed on e-mobility industry

Transport Cabinet Secretary Kipchumba Murkomen has strongly rejected any plan to introduce taxes on the electric mobility industry.

Murkomen said such taxes would “greatly harm an industry that is still in its early stages” as it will hinder the adoption and growth of electric vehicles (EVs) in the country.

Murkomen emphasised the importance of electric vehicles in environmental sustainability and reduction of carbon emissions.

“The removal of the incentives introduced in 2023 not only undermines the potential for further EV adoption but also risks stalling the momentum gained in recent years,” he said.

Currently, all products which are aimed at promoting the adoption of e-mobility and renewable energy are zero-rated.

However, the Finance Bill, 2024, has proposed 16 per cent VAT on the supply of electric bicycles, solar and lithium-ion batteries and electric buses of tariff heading 87.02.

In his submission to the Finance Committee, Murkomen pointed out that the incentives for the e-mobility introduced in 2023, through the Finance Act had positively impacted the industry.

According to the CS, the uptake of electric vehicles has continued to increase with numerous start-ups setting up in Kenya.

Kenya, he said, has aligned its sustainability and carbon reduction commitments to cleaner transportation to the global transition and a conducive environment to growth is essential.

“Without supportive policies, the country may miss a critical opportunity to become a leader in Africa’s electric mobility landscape, potentially limiting the reduction of greenhouse gas emissions and slowing down progress towards a greener economy,” he stated.

Statistics provided by the CS showed that NTSA by 2023, NTSA had registered 2, 128 electric vehicles.

In the last one year, he stated, the electric mobility industry has saved over one million litres of fossil fuel imports.

Kenya imports around 2.3 billion liters of petrol and diesel yearly at an estimated cost of Sh55 billion.

The adoption of electric mobility has attracted over USD 100 million (Sh12.85 billion) in investment.

This in effect has led to a significant reduction in emissions ultimately saving consumers 30 percent to 40 percent in transport costs.

The government has set a target of increasing the number of registered vehicles from 1.62 percent to 5 percent by 2025.

During his visit to the US, President William Ruto outlined his commitment to eliminate all taxes and duties applicable on the first 100,000 EVs manufactured in Kenya.

While further defending the move to introduce the incentives, Murkomen cited Ethiopia where he noted that this plan has successfully led to an increase in adoption of e-mobility.

He noted that two years since it launched a 10-year plan to have 148, 000 electric vehicles and 50,000 electric buses, the number of electric vehicles has exceeded 100,000.

The target, he said, has been raised to 500,000 electric vehicles in the ten-year plan.

“Whilst benchmarking, we recognize that Ethiopia is making serious progress in the adoption of e-mobility space by incentivizing the industry through preferential tax policies,” he said.

Article Courtesy of The Star Newspaper

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