The Kenya Association of Travel Agents (KATA), represented by Chairman Dr. Joseph Kithitu and CEO Nicanor Sabula, has presented a compelling petition to the National Assembly’s Committee on Finance and Economic Planning. The petition urges the government to reconsider the proposed introduction of a 16% Value Added Tax (VAT) on air travel-related services, particularly those supplied by travel agents. KATA’s petition argues that this tax would not only disadvantage Kenyan agents but could lead to a ripple effect, causing closures of small businesses, job losses, and a decline in competitiveness within the industry.
While the government aims to expand its tax base through the introduction of VAT on air travel services, the proposed policy comes with unintended consequences that could harm many Kenyans. The proposal risks overlooking the fact that air travel has evolved from being an exclusive privilege of the wealthy to an accessible mode of transport for a growing number of middle-class Kenyans.
Historically, air travel was seen as a luxury service, something only the elite could afford. However, this perception no longer aligns with the reality of Kenya’s modern economy. Kenya’s aviation sector has expanded rapidly, thanks to the rise of affordable domestic airlines like Jambojet, Safarilink, and Skyward. These carriers have made air travel increasingly accessible to a broad spectrum of the population. Today, a ticket for a flight from Nairobi to Mombasa or Kisumu can cost as little as Ksh 5,000, a price comparable to a long bus journey. This shift has transformed air travel into a viable, often preferred, option for business professionals, students, and even small business owners.
The rising affordability of domestic flights has made air travel not just a luxury, but a necessity for many Kenyans. Professionals travel for work, students fly to attend universities, and rural families use air travel to visit relatives in more remote areas. For many, air travel is faster, safer, and sometimes the only feasible option, particularly in regions with limited road infrastructure.
The introduction of VAT on air ticketing services could deal a severe blow to small and medium-sized businesses in Kenya. Many entrepreneurs rely on affordable domestic flights to access opportunities across the country, attend business conferences, or expand their reach. These businesses are vital to the country’s economic growth, contributing to job creation and local development.
For instance, small business owners and employees who need to travel to secure contracts or meet with clients could see their expenses increase significantly if air ticket prices rise due to VAT. Such a financial burden may force businesses to reduce their travel budgets, ultimately limiting their growth potential and affecting productivity.
Kenya’s ambition to position itself as a regional economic hub depends on its ability to provide accessible and affordable transport options for its citizens. Air travel plays a key role in facilitating movement and connecting various parts of the country, which in turn drives business and economic development. Raising taxes on air travel may hinder the country’s competitiveness by discouraging affordable travel options for the workforce.
While the government is right to explore new avenues for tax revenue, it must ensure that any tax policy takes into account the economic realities faced by ordinary Kenyans. The logic behind taxing air travel as a “luxury” for the rich overlooks the fact that it has become a vital service for people across different income brackets.
Unlike matatus or bus fares, which are exempt from VAT, air travel is increasingly seen as a necessity rather than a luxury. Many middle-income Kenyans rely on air travel to meet personal, business, or educational needs. To categorize air travel as an elite service for the wealthy fails to reflect the broader, growing demand for affordable and accessible air transport in Kenya.
The government has wisely provided tax relief on essential goods like bread and unga, which directly benefits low-income households. Similarly, tax policies affecting the aviation sector should be designed with a focus on ensuring that air travel remains accessible to all Kenyans, regardless of their financial background.
As Kenya continues to develop, air travel should be viewed as a crucial service that fosters economic growth, connects communities, and provides opportunities across various sectors. Imposing VAT on air travel services could undermine these benefits, especially for small businesses, entrepreneurs, and individuals who rely on affordable domestic flights.
Kenya’s economic future depends on finding a balanced approach to taxation that does not hinder access to essential services. By reconsidering the proposed VAT on air travel, the government can help ensure that air travel remains a bridge to opportunity, rather than a privilege for the wealthy few. Thoughtful tax policies should reflect the evolving needs of a modern economy, where air travel is no longer a luxury but an integral part of daily life for many.
