Kenyans are bracing for tough times after the Finance and Planning Committee of Parliament recommended increasing the VAT on petrol from 8% to 16%. The committee proposed raising the VAT on fuel even though prices had risen to new highs due to the impact of the Ukraine-Russia hostilities and the withdrawal of subsidies.
This implies that fuel prices are set to rise again, pushing the cost of living to new heights as the government seeks to raise an additional Kshs50 billion from the new tax measures. Currently, diesel, super petrol, and kerosene retail at Kshs 168.4, Kshs 182.7, and Kshs 161.1 per litre, respectively.
The Finance Bill proposes to introduce a new amendment in Section 17 of the VAT Act that allows the owner of taxable supplies, compensated for the loss of the goods, to pay 16% VAT. However, the duty on import declarations has been reduced. The 500-page report is expected to be tabled in Parliament.
Read more: EPRA Releases April Fuel Prices-What You Need To Know
Despite the recommendation for an increase in VAT on fuel, some clauses in the Finance Bill 2023 have been revised following the public outcry. The 3% housing tax has been reduced to 1.5% of basic pay. A 20% to 12.5% tax reduction has been recommended for betting.
Content creators who had faulted the government’s plan to introduce a 15% withholding tax on income will now pay a 5% withholding tax. The increase in tax on mobile transfers from 12% to 15%, which had been recommended earlier, will be retained at 12% as mobile transfers are used by millions to send and receive money daily.
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