Review price of fuel and basic commodity levies
Parliament has a chance to redeem itself and resolve the contentious fuel price increases that have caused so much pain and dissatisfaction among the citizens. National Assembly Speaker Justin Muturi has tasked the Finance Committee to review the Finance Act to repeal sections that allow for increased taxation of petroleum products. This comes as a result of a petition by public-spirited individuals and general denunciation by the citizens.
Parliament’s response is timely and should be expedited. The committee should carefully consider the petition to scrap the provision in the Act that provides for eight per cent Value Added Tax (VAT) levied on petrol and petroleum products, while offering alternatives on how the government can generate other revenues to plug budget deficits.
The fuel tax has been a subject of public debate for a long time. Introduced in 2018, its implementation has been pended for fear of backlash. Yet Parliament approved its execution this year, opening the way for the Energy and Petroleum Regulatory Authority (Epra) to raise the prices.
Too many levies
Beyond the tax, the National Assembly’s Finance committee has to investigate other reasons why fuel is so dear in Kenya. Independent investigations indicate that there are far too many levies on fuel — such as railway development levy and petroleum development levy — which, cumulatively, lead to high pump prices. The rationale for these levies should be interrogated and the appropriate proposal made to scrap them.
High fuel prices automatically translate to a surge of production cost, hence an increase in the prices of food, transport and other basic needs and, ultimately, a higher cost of living. This is the reason why the government has to be pushed to reduce the cost of fuel. Review of the VAT law is just but the beginning; there are other punitive laws that should be revised.
The lesson here is that the MPs should always serve the public interest. It is hypocritical of them to approve a bill and then turn around later to condemn it when it backfires.
