Galim Khussainov
Inflation and the tengeBankingLending and mortgagesTaxationEconomy and public policyManagement

Taxation · 2 min read

What the New Vehicle Tax Will Mean

Translated from Russian with the help of AI. Original: Russian version

A vehicle tax built into the fuel excise is a more sensible option than higher taxes on older cars, which would hit poorer households hardest. A differentiated rate, heavier on gasoline and minimal on diesel, would spare carriers and encourage a shift to gas.

I recently read that two options for taxing vehicles are currently under consideration. The first is to build the tax into the excise duty. The second is to refine the existing tax system and raise taxes on older cars, on the pretext of protecting the environment.

I believe taxes on older cars make sense if, and only if, we have joined the ranks of the thirty most developed countries. Until then, forcing poor people to pay extra for an aging car bought some 10 years ago is inhumane and wrong.

Building the tax into the excise is, I think, the most sensible option, because:

1) The tax burden would be distributed fairly: the more you drive, the more you pay.

2) It would encourage people to use public transport more, or to switch to more environmentally friendly fuels such as gas, and to electric cars.

3) It would encourage people to buy cars with lower fuel consumption.

4) Tax collection would be simpler, because there would no longer be any need to monitor thousands of vehicles.

5) The number of tax administration staff could be reduced.

The main problem is that carriers would suffer if fuel prices rose. In this respect, I think it is best to introduce a differentiated vehicle tax, with a heavier burden on gasoline and a minimal one on diesel. It is diesel that is used for freight and production. Strange as it may seem, diesel is also more environmentally friendly. Large carriers would not be hurt, and small ones would get an additional incentive to switch to gas.

As for supporting the domestic car industry by increasing the tax burden on the poor, that is complete nonsense. The people who would suffer are those who can barely afford a car from AvtoVAZ. Korean cars would clearly be out of reach. And for many rural residents, an old 1995 Volkswagen is the only means of survival: taking milk to the city in the morning, driving a cab in the evening, and taking a lamb to the market on weekends.

A tax on older cars would drive their value down to almost nothing and turn them into dead weight. Nobody would scrap them, and tax collection would remain low.

I hope our deputies at the "Beijing Palace," with their liter of whisky, will not forget about ordinary people.

Published in: Ratel.kz, 16 April 2016

More on this topic

The 2026 Budget After Seven Months: Where Revenues Really Fell Short

How a year-on-year comparison of the first seven months of 2026 with the same period of 2025, rather than a comparison with the plan, shows that tax revenues rose by 17%, and why the stronger tenge (484 per dollar versus 514), not the tax reform, explains most of the shortfall against plan. The reform did reduce local budget revenues, mainly through a lower personal income tax (PIT) burden, and shifted the tax base toward the national budget.

VAT Refunds for Agricultural Exporters

How a personalized VAT refund mechanism for agricultural exporters could address the current system, under which up to 80% of claimed VAT is effectively not reimbursed and large and small agricultural producers are put on unequal footing. The proposal would deny exporters a refund only for the VAT portion matching the producer's benefit (6.4% of turnover in the KZT 100 million example), rather than for all input VAT.

On the Construction Market

How the new Tax Code, including the VAT increase to 16% and the extension of VAT to apartments whose construction begins on or after January 1, 2026, will affect housing construction in Kazakhstan. It examines why the end of small-business tax breaks will raise construction costs, cut developers' net sale prices and profits, and pose risks for the regions, with the effect expected to be felt from 2027.