Consumers protest against increasing taxation on fuel 

Thursday, July 16th, 2020 00:00 |
Pump price. Photo/Courtesy

Lewis Njoka @LewisNjoka

Kenyans have expressed discontent over high taxation on fuel, a day after the government announced sharp price rises.

The furore was fuelled by the fact that over half of the amount paid at the pump for fuel goes to government as levies and taxes, piling more pain on Kenyans amid coronavirus (Covid-19) pandemic.

In July review by Energy and Petroleum Regulatory Authority (Epra) the maximum pump prices for Super Petrol, Diesel and Kerosene in Nairobi would increase by Sh11.38, Sh17.30 and Sh2.98 per litre respectively.

Consequently, Super Petrol, Diesel and Kerosene will now retail at Sh100.48, Sh91.87, and Sh65.45 in Nairobi.

A breakdown of costing by Epra shows that taxes and levies account for Sh53.56 out of the Sh100.48 Nairobi residents are paying for a litre of petrol. 

Before adding tax, a litre of Petrol in Nairobi costs Sh46.92. This amount includes Sh31.42 landed cost, Sh3.11 storage and distribution cost and Sh12.39 as profit for wholesalers and retailers.

The price then rises to Sh100.48 per litre after a Sh53.56 worth of taxes and levies is added.

These include Sh18 road maintenance levy, Sh20.92 excise duty, Sh5.40 petroleum development levy, Sh0.25 petroleum regulatory levy, Sh0.56 Railway Development Levy, Anti-adulteration levy, Sh0.03 merchant shipping levy, Sh0.99 import declaration fee, and Sh7.41 Value Added Tax (VAT).

The amount of taxes levied on petroleum products has been a bone of contention for years as they keep on piling, with the products appearing to be an easy target for the taxman.

For instance, the relief witnessed at the global stage especially this year when crude oil prices dropped into negative territory for the first time in history, failed to register in the country with the government slapping fuel products with new levies and taxes to deny Kenyans the much-needed relief at the pump.

Market watchers say taxation on petroleum products by Kenya mirrors other jurisdiction such as South Africa where taxes account for 40 per cent of the retail prices.

“These taxes and levies are a crime perpetrated on the people of this country. How can taxes and levies be more than two times the cost of product for kerosene? Ephraim Njega, an analyst posed.

Fares, he opined, are going to rise and possibly lead to more flouting of social distancing regulations thus undermining the fight against Covid-19 and risking the lives of Kenyans.

Njega disclosed that the Petroleum Development Levy has been increased from 40 cents per litre in June to Sh5.40 per litre, a 1,350 per cent increase. 

“VAT is being charged even on other taxes and levies. The excise duty was to be adjusted for inflation from first July but MPs deferred it to January next year.

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