The Kenya Auto Bazaar Association, in an advertorial in national newspapers, claimed they pay KSh49 billion a year in import tax.
A new policy limiting the age and make of used car imports could sharply cut profits in Kenya’s used car trade.
A lobby group claimed the trade paid an annual KSh49 billion in import taxes. But total import tax on both used and new cars averaged KSh47.3 billion in the last two financial years.
While the dealers certainly feel threatened by the proposals, inaccurate data can only hurt their cause.
Second-hand car dealers in Kenya are feeling the squeeze as the government seeks to limit both the age and make of cars that can be imported.
In a draft national automotive policy, authorities cite high maintenance costs and a drain of foreign exchange. But dealers have labelled the policy “discriminative” and “solely designed” to drive them out of business.
The Kenya Auto Bazaar Association, traders who import and sell used cars, recently took out a full-page advertorial in national newspapers.
In it they argue that the policy would make owning a car the privilege of a few. “Please Mr President, please don’t shut us out,” they urge in the February 2019 “humble appeal”.
They also give figures to show how important their trade is to the economy. “We are contributing to the national government in excess of KSh49 billion in taxes annually,” the advertorial says.
We checked if this figure – about 3% of the taxman’s total annual collection – adds up.
The appeal was signed by Major (Rtd) John Kipchumba, the auto association’s chairperson, and Charles Munyori, the secretary.
Munyori told Africa Check they did not have published tax figures, so they came up with an estimate.
“What we did is that we worked on some figures. The number of imports, so the number of used vehicles that are imported into the country every year, and then we took the average duty.”
How was the average calculated? Munyori said they used KSh450,000 – the “average tax” paid to import a typical saloon car of 1,500 cc engine capacity.
Calculating ‘average import taxes’
A range of taxes apply when a used car is imported. These include import duty, excise duty, value added tax, an import declaration fee and a rail levy.
Using the tax agency’s motor vehicle import duty calculator, Africa Check estimated that a used 2014 Toyota Axio of the 1,500 cc engine capacity the car dealers used would cost at least KSh508,000 to import.
While 1,500 cc cars were commonly imported, that did not mean the import taxes paid on them constituted “average import taxes”, Alex Murage, a director at professional services firm PwC Kenya, told Africa Check. This figure would need to be calculated in detail, he said.
The tax agency also says the calculator is only a guideline. It does not include other charges such as registration and port fees, or consider enhancements to the car.
Kenya raised KSh1.28 trillion in total tax in the 2016/17 financial year, and KSh1.47 trillion in 2017/18. That’s according to the 2018 economic survey by the Kenya National Bureau of Statistics.
But the official data gives different numbers for car imports.
The national statistics agency says some 94,464 motor vehicles were imported into Kenya in 2017, at a cost of KSh85.22 billion. These were both new and used.
But the same economic survey says 114,133 vehicles were landed at the port of Mombasa in 2017, but does not say if any were in transit.
The agency also publishes a “statistical abstract” to give a “complete time series data of the Kenyan economy from one single official source”. The 2018 edition gives the number of new and used imports in 2017 as 81,585 motor vehicles and 3,946 buses, trucks and lorries.
Africa Check has asked the statistics agency to clarify the various figures. We will update this report with their response.
The number of imported used cars could be calculated by deducting the number of imported new cars from the total number of imported cars, the Kenya Revenue Authority told Africa Check.
For the number of imported new cars, the authority directed us to the Kenya Industry Motor Association, an umbrella body for carmakers and dealers.
The association estimated that its members accounted for about 96% of all new motor units sold in Kenya, Frances Cattermole, an official, told us. The organisation’s data shows 10,722 cars were imported into Kenya in 2017, and 14,003 in 2018. These ranged from saloons to buses, trucks and prime movers.
Using these and the various official figures, all for 2017, the number of used car imports could have ranged between 70,863 and 103,411.
How much revenue did the government earn from taxing motor vehicle imports?
The revenue agency said it received KSh47.2 billion in tax on all imported vehicles, both new and used, in 2016/17. In 2017/18 the figure was KSh47.4 billion.
The data isn’t divided according to new and used vehicles, Paul Agonda, a Kenya Revenue Authority spokesperson, told Africa Check.
The Kenya Auto Bazaar Association’s KSh49 billion estimate of “annual” taxes on used car imports is higher than the taxman’s KSh47.4 billion figure (in 2017/18) for taxes on all vehicle imports.
The revenue agency counts imported new cars in its figure, so the tax from used cars is likely to be even less.
Urging a review of rules they say will hurt their business, used car dealers in Kenya have pleaded with the country’s president for relief.
They claimed to pay more than KSh49 billion in taxes annually. But the tax agency told Africa Check it collected an average of KSh47.3 billion in the last two financial years.
This figure is for both new and used car imports, meaning the tax raised from second cars is likely even lower.
We therefore rate this claim as incorrect. While the dealers certainly feel threatened, inaccurate data can only hurt their cause.
Further reading:
https://africacheck.org/reports/no-60-days-of-the-average-kenyan-wage-wont-buy-you-a-new-iphone-xs/
https://africacheck.org/reports/is-top-ruling-jubilee-party-official-right-about-who-is-paying-income-tax-in-kenya/
Please complete this form to receive the HTML sharing code.
The All Progressives Congress hopes to retain power in February polls. But several claims recently made by top party leaders didn’t add up.
With the general election only weeks away, four candidates slugged it out in the Kenyan capital Nairobi. Did they get their facts right?
As the seat of Kenya’s national government and a major economic hub, the race to govern Nairobi county is closely watched.
George Luchiri Wajackoyah says marijuana exports will solve Kenya’s economic problems. But his economics of ganja don’t add up.
As he eyes the exit door, Uhuru Kenyatta is keen to highlight his achievements after nine years. Did his Madaraka Day claims stack up?
With Nigeria set to hold elections next year, the search for a new president is gathering momentum. But does a claim about the current leade…
Africa Check values your trust and is committed to the responsible management, use and protection of personal information. See our privacy policy.
For democracy to function, public figures need to be held to account for what they say. The claims they make need to be checked, openly and impartially. Africa Check is an independent, non-partisan organisation which assesses claims made in the public arena using journalistic skills and evidence drawn from the latest online tools, readers, public sources and experts, sorting fact from fiction and publishing the results.
Africa Check values your trust and is committed to the responsible management, use and protection of personal information. See our privacy policy.
© 2022 – Africa Check – All rights reserved.
We will never charge you for verified, reliable information. Help us keep it that way by supporting our work.
Africa Check values your trust and is committed to the responsible management, use and protection of personal information. See our privacy policy.
Support independent fact-checking in Africa.
