Cut tax on electric vehicles to achieve net zero emissions

Last year’s COP26 climate change talks in Scotland came up with a number of resolutions geared towards addressing the climate crisis. Chief among them is to secure global net zero emissions by the middle of this century.

This means that by 2050, global greenhouse gas emissions must be equivalent to the amount of greenhouse gas emissions that nature can sufficiently suck out of the atmosphere.

The problem is that we are emitting too much carbon dioxide into the atmosphere, and this in turn leads to rising global temperatures which have devastating effects on plants and animals alike.

To achieve this global net zero emissions, COP26 recommended that countries must accelerate the phase-out of coal, curtail deforestation, encourage investment in renewable energy, and more importantly, speed up the switch to electric vehicles.

Let's talk about the last recommendation on switching to electric vehicles. The vehicles we drive on our roads today contribute to a significant amount of carbon dioxide into our atmosphere.

In fact, the Environmental Protection Agency (EPA) in the US notes that transportation is the fourth largest contributor to the share of greenhouse gas emissions globally.

To put that into perspective, EPA puts it at 4.6 metric tonnes the amount of carbon dioxide a typical passenger car emits per year. Multiply that with the number of vehicles on our roads today and you begin to see the enormity of this matter.

Electric vehicles, on the other hand, do not have any tailpipe emissions. The only greenhouse emissions might occur due to unclean generation of electricity to power electric vehicles or the manufacturing process of electric vehicles.

So, if we are to achieve net zero emissions and save future generations, part of what we must do is embrace and promote electric mobility.

The reality, however, is that electric vehicles are expensive to buy compared to their petrol and diesel-engine-powered counterparts (but the running costs are significantly cheaper for electric cars).

Other governments globally realised that the high initial costs of buying an electric vehicle can easily discourage their adoption in favour of cheaper petrol and diesel-engine-powered vehicles. So they offered incentives to help bring down the cost of buying an electric vehicle.

In the UK for instance, the government has a grant scheme for zero-emission vehicles that helps car buyers save on their new electric cars. In the US, Joe Biden hopes to make electric vehicles more affordable by offering tax credits to buyers and pumping billions towards installation of electric vehicle chargers across the country.

In China, the market leader in electric vehicle adoption, the government, has put in place subsidies that reimburse buyers of electric different amounts depending on the vehicle's range.

But what are we doing as a country? Are we even thinking about electric vehicles?

According to the Kenya Revenue Authority, the following taxes and duties are payable to new or used vehicles;

“Import duty is 25% of the Customs value (CIF) of the vehicle i.e. 25% of (Invoice value + Insurance + Freight charges), Excise duty is 20% of (Customs Value + Import Duty) for vehicles with 1500 cc and below and 25% for vehicles above 1500 cc, VAT is 16% of (Customs Value + Import Duty + Excise Duty), Rail Development Levy of 2% of customs value and Import Declaration Fee of 3.5% of the CIF.”

Keeping in mind that all these taxes are pegged on the value of the car, perhaps the government must now zero-rate the importation of electric vehicles to bring down the cost of ownership to Kenyans.

This will even encourage more investors to set up charging stations across the country and spur further adoption of electric vehicles.

Sang is an Audience Engagement Producer at Nation.Africa

Twitter: @Sang_254