Government now takes up to Sh79 in tax for every litre of fuel

Consumers are now paying up to Sh79 as taxes per litre of fuel, underlining the impact of the charges in inflating petroleum prices that will see the Kenya Revenue Authority (KRA) collect Sh29.2 billion per month from diesel, petrol and kerosene sales.

The latest price review shows that Sh79.31 goes to taxes and levies on every litre of petrol followed by Sh67.35 a litre of diesel — the most used fuel in the Kenyan economy. Taxes and levies account for Sh62.81 for every litre of kerosene.

The higher composition of taxes and levies will see the KRA raise an estimated Sh5.79 billion more per month from the three fuels from the Sh23.38 billion raised per month since September last year before the doubling of value-added tax (VAT) to 16 percent.

Taxes and levies as a component of the price of a litre of fuel have significantly grown on the back of the increase in the landed cost of the commodity and the doubling of VAT two months ago.

In the monthly pricing review to October 14 last year, taxes and levies accounted for Sh64.14 per litre of super petrol, Sh53.39 for every litre of diesel and Sh46.81 per litre of kerosene.

A litre of diesel jumped by Sh21.32 to Sh200.99 in Nairobi in the latest price review while that of super petrol rose by Sh13.96 to Sh211.64. Kerosene jumped by the highest margin of Sh33.13 a litre to 202.61 effective Friday, triggering public uproar.

President William Ruto has in the past said that the government does not overtax fuel, despite the growing public anger over the high prices and the ripple effects on the cost of living.

“We are not overtaxing ourselves,” Dr Ruto said early this year when he argued for doubling of VAT to 16 percent from July 1.

The taxes, some of which are levied in percentage points, help to drive up final prices as the cost of the products rise in the international markets.

Excise tax is the biggest tax per litre on fuel followed by VAT. The levies are road maintenance levy, petroleum development levy, import declaration fee, petroleum regulatory levy, railway development levy, anti-adulteration levy and merchant shipping levy.

Parliament approved the doubling of VAT through the Finance Act 2023, setting off high prices that shot even higher after the government discontinued stabilisation of fuel to cushion consumers.

Dr Ruto argued that the doubling of VAT will be balanced by the removal of the railway development levy (two percent) and import declaration fee (3.5 percent).

The KRA raised Sh27.96 billion in taxes and levies last month and Sh23.38 billion in September last year, based on the petroleum consumption figures from the Energy and Petroleum Regulatory Authority (Epra).

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