Fuel, Kerosene and Gas to be Taxed

The government is yet to start levying Value Added Tax (VAT) on fuel, kerosene, cooking gas and jet fuel. Prices of these items will increase by 16 percent.

This move will kick off in September this year after the expiry of a three-year deal where the items had been exempted from tax. This is going to affect Kenyans especially the low income earners negatively.

Increase of prices on the stated items will mean that there be an increase on household budgets and transportation costs, both public service and private vehicles.

Motorists, households and airlines will be the most affected areas since they are the ones who use them directly and on day today basis.

During the reading of the national budget in June last year, the government imposed an additional Sh.3 per litre of fuel in road maintenance levy. Exercise duty on diesel increased again in December from Sh.8.24 per litre to Sh.10.3 per litre.

Crude oil prices are the only ones that have been said to remain low this year. Diesel that is normally used to power industries, trucks buses and other machineries is at Sh.78.51 per litre in Nairobi while petrol goes at Sh.90.06.

Increase to this prices is as a result falling down of crude oil prices across the world from over $100 per barrel in the year 2014 to $37 last month.

MP’s are being pushed to make sure that the VAT implementation is forwarded due to the current high cost of living by the Consumer Federation of Kenya (cofek)

Last year, the treasury wrote a letter to the international monetary fund requesting for the abolishment of VAT exemptions on oil products by August this year.

When the cost of cooking gas and kerosene goes up, most households get affected since these are the main items that are used for cooking and lighting.

This will mean that consumers will be forced to dig dipper into their pockets so as to afford the commodities, especially kerosene as most Kenyans still depend on kerosene for lighting and cooking as it is cheaper compared to other forms of energy.

Article by Vera Shawiza.