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Working Kenyans in major towns to be hit hardest by fuel taxes

BUSINESS
By Dominic Omondi | September 14th 2018
By Dominic Omondi | September 14th 2018
BUSINESS

The new tax imposed on petroleum products will hit Kenyans working in urban centres hardest.

Official data shows that workers spend a huge chunk of their income on petrol, liquefied petroleum gas (LPG), matatu fare and eating at restaurants and hotels.

The price of refilling a 13kg gas cylinder will rise to Sh2,522 from Sh2,200, while that of the 6kg will shoot to Sh1,160 from Sh1,000.

LPG is also a key energy fuel for most restaurants and hotels, which is their second dining place after their homes, where they spend evenings and weekends.  

The 16 per cent tax on gas, electricity and transport will be reflected on the food bill they now have to foot under the new tax regime. A decent meal that normally sells at Sh400 will now average Sh500 when they factor the increased costs of gas, electricity and transport.

The same working Kenyans will have to put up with an indirect cost of the fuel tax, which will creep into their electricity bill as Kenya Power is set to transfer the inflated fuel adjustment cost to its consumers.

On September 1, Kenya Revenue Authority (KRA) and the Energy Regulatory Commission (ERC) issued guidelines on the implementation of the controversial taxes despite an earlier decision by lawmakers suspending it for another two years.  

Domino effect

The decision sparked protests. Observers say the levy will have a domino effect on the country’s cost of living, pushing up prices of food, electricity and transport to unmanageable levels.

Generally, for every Sh1,000 that a typical working Kenyan spends, Sh180 goes to housing, water, electricity, gas and other fuels, according to the Kenya National Bureau of Statistics.

Transport - by personal cars, matatus, buses, taxis, commuter trains or boda-boda - takes up another Sh90.

Kenyans spend a third of their income on food. By the time of going Press yesterday, cereal millers were still holed up in a meeting, reportedly trying to make sense of the new tax measure. “(What) we are sure of is that the prices will certainly go up,” said a miller who sought anonymity, as he was not allowed to speak to media on behalf of the millers.  

The new VAT now takes the number of taxes and levies to Sh57.57 on super petrol, Sh46.18 on diesel and Sh25.38 on kerosene. ERC issued a guideline that has seen maximum pump prices of a litre of super petrol in Nairobi shoot to Sh127.80 and Sh141.61 in Mandera.

 

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