KRA misses Sh12.9b fuel tax target as motorists dump cars over high prices

The government has missed out on billions of shillings in fuel revenues due to record high prices, which are forcing Kenyan motorists to keep their cars at home, the taxman has revealed.

According to the Kenya Revenue Authority (KRA), the fuel revenues for the period between July and September this year had a performance rate of 84.8 per cent.

This resulted in a deficit of Sh12.9 billion compared to the KRA set target, the revenue agency said.

While appearing before the National Assembly Finance Committee, KRA Commissioner General Humphrey Wattanga, presented data highlighting that the decline in collections represented an 8.6 per cent drop compared to the previous period of July to September last year.

"Oil revenue recorded a performance rate of 84.8 per cent in July-September 2023 for a deficit of Sh12.9 billion against target, and a decline of 8.6 per cent over July-September 2022 collections," said Mr Wattanga.

"The tax category's performance was affected by a decline in overall oil volumes by 12.4 per cent, attributed to a drop in fuel consumption in January-June 2023 driven by high pump prices that depressed demand," said KRA.

The data also backs similar projections by the Kenya National Bureau of Statistics.

Kenyans have in the last year or so been slowing down on consumption of some petroleum products, with the current high prices expected to make the situation worse.

"High fuel landing costs impact the eventual retail price. Landing costs are mainly driven by international oil prices that have been on the rise since July 2023, and a continual depreciation of the exchange rate," said KRA.

This admission by the KRA coincides with the record-breaking fuel prices, which have already adversely affected the living standards of millions of Kenyans.

The high cost of fuel is compelling motorists across the country to abandon their vehicles in large numbers.

This reduction in fuel usage is viewed as an early indication of weakened industrial activity and decreased consumer spending, raising concerns among observers about a potential recession.

A recent spot-check by The Standard revealed a noticeable decrease in the number of vehicles on Nairobi's major highways.