Fuel is not a luxury, business lobby warns amid high prices

Nairobians along Jogoo Road get alternative means to get to work on Day Two of the public transport crisis. [Stafford Ondego, Stafford]

High fuel costs are crippling the flow of Kenya’s economy, a leading business lobby warned on Wednesday.

This is as the government prepares to return for talks in a week with transport operators following paralysing strikes that have rocked the country.

“Fuel is not a luxury. It is the bloodstream of the economy,” Kenya National Chamber of Commerce and Industry (KNCCI) Chief Executive KK Mutahi said yesterday during a webinar hosted by the lobby in collaboration with Ichiban Tax & Business Advisory LLP.

“It moves goods, powers production, supports logistics, and influences the price of almost every product and service in the market. When the cost of fuel rises, the cost of doing business rises, and the impact is felt by businesses and consumers alike.” 

Mutahi said further taxation risks tipping struggling businesses over the edge, sounding a note of caution as the government pushes ahead with the Finance Bill 2026 without addressing the cumulative tax burden on key inputs. The warning comes just days after major protests erupted in Nairobi and other major towns, with police firing tear gas to disperse crowds chanting anti-government slogans.  

Soaring pump prices, which have breached historic highs, have pushed up the cost of transport, food, and basic commodities, triggering paralysing strikes by transport operators. 

Mutahi expressed deep concern over the cumulative burden of taxes and levies, especially on fuel, which remains a major concern for the private sector. 

Tax experts at Ichiban Tax & Business Advisory suggested that President William Ruto’s government could reduce the tax burden by scrapping the Housing Fund Levy.  Proceeds from the levy have reportedly been reinvested in Treasury bills, indicating that collections are not being deployed as quickly as they are taken in. 

The experts also cited a proposal by the Kenyan Bankers Association to cut Pay As You Earn (PAYE) tax rates, arguing that a five per cent reduction could unlock Sh28 billion into the economy, potentially creating 36,000 new jobs while generating an additional Sh31.2 billion in revenue within a year. 

Mutahi stressed that tax policy must unlock enterprise growth, not weaken it, and called for meaningful consultation between policymakers and businesses.

“Private sector engagement is no longer an option. It is a constitutional obligation and a practical necessity,” he said.