More pain as Ruto administration proposes additional tax on Fuel
Kenyans should brace themselves for even higher fuel prices if a new proposal by the Ruto administration to increase road maintenance tax is approved
Kenyans should brace themselves for even higher fuel prices if a new proposal by the Ruto administration to increase road maintenance tax is approved.
To account for the rising cost of building materials, the Kenya Roads Board (KRB) plans to raise the road maintenance tax by Sh5.
The tax, known as the road maintenance levy fund (RMLF), is now set at Sh18 per litre of petrol and diesel. Of that amount, Sh3 goes toward the annuity fund, and the remaining amount is used for road maintenance, development, and rehabilitation.
The tax is collected at the fuel pump.
This means that motorists would pay Sh23 per litre of fuel at the pump if the proposal is approved, raising the overall cost of the commodity
“Recommend and lobby for a review of RMLF rate…. Increase of RMLF rate by Sh5,” KRB said in its work plan for the period 2023-2027, arguing that even though the price of petrol and diesel has been rising since 2020, the amount charged as fuel levy remained constant at Sh18 per litre despite the increased demand for better roads.
The KRB is proposing that the changes take force in 2025.
The State maintains the country’s road network through the Kenya Roads Board Fund (KRBF), which is mainly financed through the proceeds of the RMLF as well as transit tolls.
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The KRBF is shared by the road agencies charged with maintenance — Kenya National Highways Authority (Kenha), Kenya Urban Roads Authority (Kura), Kenya Rural Roads Authority (Kerra), Kenya Wildlife Services (KWS), and the county governments.
KRB said it targets to raise Sh150 billion through the capital markets and other creditors to finance road maintenance programmes amid threats of lower RMLF collections as more users shifted to electric vehicles.
“With the accelerated transition to e-mobility, the effect of global climatic change, and gradual transition from the traditional use of fossil fuels to green energy, the Board expects a future reduction in fuel levy collections,” KRB said.
“The Board is currently conducting a study on the economic impact of electric mobility on sustainability of the Road Maintenance Levy Fund which shall inform the Board on the sustainability of continued dependability of fuel levy as the only major source of financing road maintenance, rehabilitation and development and recommend on other sustainable financing options based on the changing operational environment,” it added.
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