Railway levy nets Sh95bn in five years as Kenyans pay for the line

Taxpayers coughed up Sh95 billion in five years to finance the standard gauge railway to June 2018 from imported goods alone.

Data from the Kenya Revenue Authority shows that the Railway Development Levy introduced in 2013 to help fund the construction and operations of the line has collected the amount, signalling the burden taxpayers have had to shoulder to finance multibillion-shilling project.

Traders who have been paying an extra 1.5 per cent on the total value of imports have always passed down the levy to consumers.

Taxpayers have also been paying Sh0.50, Sh0.52 and Sh0.51 on every litre of petrol, diesel and Kerosene respectively to fill the SGR kitty over the years as the grace period for the loan China advanced to Kenya in 2014 to build the Mombasa-Nairobi rail elapses this month.

According to the Kenya National Bureau of Statistics Economic Survey 2019, the value of imports rose by 2 per cent in 2018, creating an even better yield for the SGR levy.

“Expenditure on imports rose by 2 per cent from Sh1.72 trillion in 2017 to Sh1.76 trillion in 2018,” KNBS wrote in the report released last week.

At the 1.5 per cent rate, the RDL for 2018 is expected to hit Sh26.4 billion for the calendar year, pushing the railway burden to the taxpayers since its inception to Sh122 billion just from imports.

The collection remains pegged on the value of goods brought in, with Kenya being a net importer of various commodities including machinery, cars, clothes, electronics and some foodstuff.

This explains why there was more collection even after the total import traffic handled declined from 25.6 million tonnes in 2017 to 25.5 million tonnes in 2018 mainly on account of a 5.1 per cent drop in the volume of imports of bulk liquids.

“This reduction resulted from a slowed demand for kerosene following the imposition of an anti-adulteration levy of Sh18 per litre during the review period,” KNBS wrote in the Economic Survey.

Consumers were forced to pay more for imports since the 2013 levy as the government struggled to top up what it had allocated to finance the SGR, which is now set to open the first part of its second phase between Nairobi and Naivasha.

The SGR repayments whose details have largely remained a closely guarded secret by the government, will now pile more pressure on Treasury’s debt servicing as the principal repayment bills for the first phase.

Treasury external debt redemption documents show that Kenya projects to repay Sh26 billion more to the Exim bank from the next financial year.

The government also, in its financing model for the project, had planned to initiate road transit toll levy, green tax in new vehicle registration and the sale of the current metre gauge railway assets estimated to be capable of raising Sh41 billion.