The taxman is collecting Sh62.89 on every litre of petrol, a 39 percent jump in tax collections over the past two years that has made the Kenya Revenue Authority (KRA) a key beneficiary of the surge in pump prices.
The KRA collected Sh45.1 in taxes and levies in June 2020 from petrol, and Sh51.6 last year. The taxman is now collecting Sh62.89, underlining the impact of duties on driving petrol and diesel prices.
The surge in crude oil prices and the taxes have hit household budgets in an economic setting where the costs of basic items have surged, sending inflation to a 27-month high in May.
But it has enhanced the KRA collection, with taxes from fuel estimated at Sh22.9 billion in June or 15.7 percent of average Kenya’s overall monthly duties of Sh145 billion.
This is more than three times the Sh7 billion monthly subsidy the State has offered to cushion consumers from the surge in the price of oil in international markets.
Like other frontier economies, Kenya is reeling from a surge in crude oil prices since last year, which has forced it to start subsiding retail prices from April last year.
The subsidy scheme is proving unsustainable and the Treasury warns that it has started cutting back on the State support, which sets the stage for a further rally in local pump prices.