Tame high taxes to check fuel prices, MPs told
The agency that regulates monthly fuel prices in Kenya has absolved itself saying high taxes are to blame for the spike in prices of the commodity.
In the four months to August this year, the government used Kes8.7 billion to cushion Kenyans against rising fuel prices under the petroleum price stabilization mechanism, sector regulator EPRA told House committee on Tuesday.
The petroleum price stabilization deploys collections from the petroleum development levy (PDL) that is calculated at Kes5.40 per litre for petrol and diesel and 40 cents for kerosene.
While appearing before the Finance and National Planning Committee of the National Assembly, EPRA Director General David Kiptoo turned the heat on the Treasury and Petroleum ministries as well as the legislators noting that they have final say on the taxes charged on fuel products in the country.
At the moment, fuel consumers pay up to Ksh.58.81, Ksh.46.46 and Ksh.41.14 in levies for every litre of petrol, diesel and kerosene respectively.
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“Taxes is really in the purview of the National Treasury from a policy standpoint and ultimately Parliament. The taxes, however, do have a compounding effect. When the landed costs of petrol increases, taxes also rise. This taxes are almost at par with the landed cost,” Mr Kiptoo noted.
In the latest price review, however, the dropping of the cushion saw fuel prices surge by Kes7 on average sparking public outcry.
During the session, EPRA could not substantiate the reasons for the fund’s freeze, instead passing the buck to the Petroleum Ministry and Treasury when it appeared before the Gladys Wanga-led committee.
The committee is considering a petition to vacate VAT on petroleum products just a day after the High Court ordered freeze on the taxman plan to review upwards the prices of fuel and tens of other products in line with rising inflation in Kenya.
The energy sector regulator said cheaper prices for fuel in neighboring countries was attributable to lower taxes in their economies.
“The Rwandan government has, for instance, recently reduced the road maintenance levy by an equivalent Kes9.14 and Kes7.29 per litre for super and diesel for the period August to October 2021. This is an intervention by the Rwandan government to be able to cushion consumers against the spike in prices,” added Mr Kiptoo.
