Energy dealers sue to block 16pc VAT on cooking gas
A dealer ferries cooking gas to customers in Nyeri town on June 13, 2019.
What you need to know:
- EDA argues that introduction of the tax on liquefied petroleum gas (LPG) will directly increase the cost of living, as it is a basic commodity required daily, forcing consumers to avoid its use.
The Energy Dealers Association (EDA) wants a court to block the 16 percent value-added tax on cooking gas that took effect this month.
EDA Secretary-General Kepher Odongo Friday filed a suit at the High Court through Okoth & Co. Advocates.
EDA argues that introduction of the tax on liquefied petroleum gas (LPG) will directly increase the cost of living, as it is a basic commodity required daily, forcing consumers to avoid its use.
A 13kg cylinder of cooking gas costs Sh2,250, a price which would increase to Sh2,610 with the new tax.
As a result, consumers will revert to unclean fuels such as firewood, charcoal and kerosene, a regression on the strong support the government has had on environmental conservation.
“This will have a ripple effect on small and medium clean cooking enterprises as the decrease in demand for their products may make their business models less commercially viable,” states the petition filed on June 29, on which Justice Antony Mrima will give directions on July 13 .
Mr Odongo is the petitioner while Attorney-General Kihara Kariuki is the respondent.
The court ordered that the petition and the notice of motion dated June 2 be served within five days.
Implementation delayed
The 16 percent VAT was reinstated through Finance Act, 2020, which President Uhuru Kenyatta signed on June 30, 2020.
However, its implementation delayed the levy for one year, to July, due to concerns about the cost of living.
That exemption lapsed on July 1 this year, in effect removing tax exemptions and incentives available to specific sectors such as energy, with the Kenya Revenue Authority (KRA) set to swing into action.
Mr Odongo said cooking gas prices have not changed much over the years since 2016, when the National Treasury ministry scrapped the 16 percent VAT.
Kenyans have since been enjoying low prices, with the expected rise in the cost expected to pile pressure on families struggling with job loss and drastic cuts in earnings due to the Covid-19 pandemic.
Mr Odongo said this jump in cooking gas prices will be the biggest in more than two decades and will force consumers to look for alternatives.
“Reversion to unclean fuels will expose households to air pollution from cooking, increasing susceptibility to respiratory infections such as pneumonia, which shall aggravate respiratory illnesses like asthma, which may lead to severe outcomes in case of Covid-19 infection,” he said.
