Brace For Higher Gas Prices From 1st July As VAT Takes Effect

Prepare to spend around 300 shillings more in filling up your gas cylinder as from 1st July 2020 as an introduction of a 14 percent value-added tax on liquefied petroleum gas (LPG) will be in effect.

The Finance Bill 2020 removed LPG from the goods that are tax-exempt and the effectiveness of the new value-added tax (VAT) charge will see the gas prices price pushing further a majority of the homesteads in Kenya as the country’s unemployed citizens have most likely doubled as a consequence of COVID-19.

While presenting the 2020/21 Finance Bill, the Cabinet Secretary Treasury Ukur Yatani said the Bill is expected to become law by end of June 2020 as Parliament already changed an Act that used to require earlier approval of the Finance Bill to curb delaying that would mess targets set for revenue collection.

“Contents of Finance Bill are expected to be law by July. This means new taxes will take effect when the new financial year starts,” Treasury CS Ukur Yatani explained.

13-kilogram cooking gas is currently retailing between 2,000 and 2,200 shillings depending on the location but will be retailing between 2,300 to 2,500 shillings as from 1st July 2020 according to the Finance Bill 2020.

Tax on LPG had been scrapped in June 2016 as the government sought to encourage the use of cooking gas to discourage that of charcoal for a cleaner and safer environment and this saw tremendous progress in the uptake of gas in households.

Kenyans were however expecting the government not to enact the 14 percent VAT on LPG to cushion them from high gas prices following a fall in the prices of crude oil globally and also because of the current coronavirus outbreak which has stalled businesses.

It is likely that filling up a 13-kilogram gas cylinder will even cost more than 2,500 in some areas as the prices are not controlled which leaves gaps that could see Kenyans exploited by the dealers.

Did the government see an opportunity to further milk its citizens dry by taxing a vital commodity that they will need as they are urged to stay at home to curb the COVID-19 spread as all factors considered, the price of gas should be falling not rising with the fall of crude oil prices globally?

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