According to a report in the Business Daily newspaper, the suggestions were included in the draft of the medium-term tax revenue strategy.

The Treasury has stated that the government will investigate whether or not it is possible to implement a wealth tax in the form of a tax on the circulation of motor vehicles.

Owners of motor vehicles will be required to pay the fee every year in conjunction with the purchase of an insurance policy.

The Treasury noted that “there will be a minimum tax amount payable by all motor vehicle owners in addition to a graduated amount based on the engine capacity of the vehicle.”

“There will be a graduated amount based on the engine capacity of the vehicle,” it added further.

The government has plans to gradually raise the excise taxes on imported vehicles that run on fossil fuels to encourage the use of environmentally friendly vehicles.

The most recent ideas are in addition to the draft ‘National Green Fiscal Incentives Policy Framework’ that was released in January 2023. That policy framework wants to initiate the collection of a congestion fee.

Even though the proposed tax has not yet been finalized, it will target places like Nairobi, Mombasa, Kisumu, and Nakuru that have highways that are frequently crowded.

In its ‘Medium Term Strategy’ for the Financial Years 2024-25 and 2026-27, the National Treasury said the levy, which will be classified as a wealth tax, will be paid annually.

“The Kenya Kwanza government is looking at introducing an excise tax on tractors, forklifts, excavators and earthmovers but also introducing tax incentives that promote the use of green energy,” stated a report from The Star.

“At the same time, the government will be reviewing the current taxes on electric vehicles that are environmentally friendly to support the transition into a green economy,” it added further.

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Even if accompanied by high tax free allowances and tax breaks for corporate assets, a wealth tax would clearly curb production and employment in Germany in the long term. A wealth tax of 1 percent would result in an annual decrease of 0.30 to 0.35 percentage points in the growth rate of gross domestic product (GDP) in the first eight years after its introduction. This is because a wealth tax would markedly weaken both investment and capital formation incentives, which would, in turn, lower production capacity. As far as foreign investors are concerned, the introduction of a wealth tax would lead to capital flight from Germany.

A wealth tax rate of 0.4 percent on corporate assets, 1 percent on real estate and financial assets and a tax-free allowance of one million euros (2 million for jointly held assets), for example, would generate revenues of 14 billion euros in wealth tax. These revenues, however, would be offset by losses of 44 billion euros in other taxes. Net tax revenues would therefore be 30 billion euros lower than without a wealth tax. In the long term, investments would be around nine percent lower, employment would fall by 1.9 percent and economic output would be 4.5 percent lower than without a wealth tax.

The wealth tax would have a stronger negative impact on income from capital than on labour income. This would lead to a decline in the ratio between income from capital (including corporate profits) and earned income from 36 percent to 33 percent.

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