A liter of petrol could reach 200 shillings in the coming weeks if the new tax proposals from the National Treasury are accepted.
The Treasury has proposed in the 2023 budget an increase in value added tax (VAT) levied on petroleum products to a standard rate of 16% compared to the current rate of 8%.
This is one of the new tax measures that President William Ruto’s administration has set its hopes on to increase tax revenue.
The new tax on various products and services, including fuel, when completed, is expected to raise 289.3 billion shillings.
Oil marketing companies, however, warn that this could lead to higher petrol prices rising to 200 shillings per liter on July 1 if the 16% VAT wins support from parliamentarians.
The Association of Petrol Stores in the country (Poak) has warned that now is the wrong time to increase fuel tax.
Kenya’s economy, the lobbyist noted, is heavily dependent on oil, the cost of which is already at historic highs and has increased the cost of living.
“It will cause a rapid increase in the cost of living, which is already very high,” Poak said at a forum called Thursday to comment on the bill.
“We should not lose sight of the fact that fuel price inflation has been the main reason for the rise in the cost of living.
“Additional fuel tax borders on immorality. This proposal will lead Kenyans to buy petrol at about 200 shillings per litre.