How much fuel will cost after Parliament approved the 16pc VAT
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Tougher times for Kenyans after Parliament votes to increase the VAT on fuel from 8% to 16%
Tougher times for Kenyans after Parliament votes to increase the VAT on fuel from 8% to 16%.
Kenyans have to dig further into their wallets after 272 National Assembly members supported the hike of the Value Added Tax (VAT) on petrol from 8% to 16% on Wednesday, June 21.
The additional 8% of the VAT on petroleum products will have a considerable impact, particularly on the cost of basic household goods, the national income, and the price of fuel per litre.
There will undoubtedly be a huge hike in the price of petrol, diesel, and kerosene across the country after the increase was approved by the Parliament.
The additional 8 percent, which is equivalent to Ksh14.592, will be added to the existing cost of petrol in price ratio settings.
On fuel price, taking into account the other dynamics that Energy and Petroleum Regulatory Authority have to consider when setting new rates, petrol that currently retails at Ksh182.4 in Nairobi is likely to increase to Ksh196.992 by July 2023.
Diesel, on the other hand, which currently retails at Ksh167.28 will increase by 8 percent (Ksh13.3824) to around Ksh180.6624 per litre at fuel stations in Nairobi.
Meanwhile, kerosene which retails at Ksh161.48 will increase by 8 percent (Ksh12.9184) more to Ksh174.3984 at fuel stations in the capital city.
The eight percent increase in VAT would disproportionately affect low-income households, who spend a larger proportion of their income on fuel.
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Azimio opposition coalition MPs who largely opposed the proposal to increase the VAT on fuel to 16 percent argued that the move would adversely affect the cost of living.
Kitui Central Member of Parliament Makali Mulu who had moved an amendment to have the Clause on increasing VAT on fuel deleted from the Finance Bill 2023, argued that anytime VAT of fuel is increased, it results in higher costs of transportation, manufacturing, production as well as electricity.
Minority Whip Junet Mohamed termed the Clause on increasing of VAT as the “most offensive” to Kenyans, warning that it could be a precursor of a revolution in the country.
“This is the most offensive clause in this bill. When you increase VAT from 8 to 16% that is one thing that is going to make life very expensive for Kenyans,” said Junet.
He went on to accuse the Kenya Kwanza government of hoodwinking Kenyans by promising to remedy the cost of fuel by reducing taxes.
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