The Ministry of Treasury and Planning has opposed a bid by Members of Parliament to reduce taxes on petroleum products, arguing that the move would be detrimental to the already crippled economy.
National Assembly Finance and Planning Committee led by Homa Bay Women Representative, Gladys Wanga, proposed a reduction on the cost of fuel by lowering the taxes levied on the products, in a move aimed at cushioning Kenyans who are bearing the blunt of an economy that has taken a beating from the Covid-19 pandemic.
Among the changes proposed by the MPs include the reduction of the 8 per cent VAT on fuel products to 4 per cent, and reduction of VAT on Liquified Petroleum Gas (LPG) from 16 per cent to 8 per cent.
These two changes, if passed, the Treasury says, will cost them Ksh26 billion in revenue annually.
The MPs also want to reduce the petroleum development levy charged on Petrol and Diesel from Ksh5 to Ksh2.90. They also requested the Treasury to support the stabilisation of fuel prices and the development of petroleum infrastructure.
Treasury is also under pressure to reduce the gross margins of oil marketing companies from Ksh12 to Ksh9.
The Wanga-led committee argued that the country raised enough funds for its budget while the petroleum products were tax-exempt.
These proposed changes come a week prior to fuel price changes by the Energy and Petroleum Regulatory Authority (EPRA). The authority is expected to hike the prices on Thursday, October 14.
Fuel currently trades as follows per litre; Ksh134.72 for petrol, Ksh115 for diesel and Ksh110.2 for kerosene in Nairobi and its environs.
Speaking to the MPS in Parliament, Petroleum CS, John Munyes, urged Kenyans to expect fewer changes, arguing that the fuel prices will not drop anytime soon.
“The cargos will close on October 10, 2021, and therefore, it is at that time that we will know whether they are going up or down. So it is not rocket science. It is not something that I can say I will do because it is a formula that determines the price,” Munyes stated.
