The Kenya Revenue Authority (KRA) collected about Sh25.9 billion more in fuel taxes in the six months to last December, even as consumption dropped on record-high pump prices.
The official fuel consumption figures show the KRA collected an estimated Sh164.03 billion in fuel taxes between last July and December, up from Sh139.08 billion in 2022.
Consumption dropped five percent in the wake of the increased prices, with 2.28 billion litres of petrol, diesel and kerosene used in the period compared to 2.4 billion litres in the second half of 2022.
The jump in tax collections came at a time when the National Assembly voted to double value-added tax (VAT) on petrol, diesel and kerosene to 16 percent effective last July year, sending pump prices past Sh200 per litre.
Pump prices hit a record high of Sh217.36 per litre of petrol and Sh205.47 per litre of diesel in Nairobi last October, highlighting the impact of the higher taxation.
A litre of kerosene hit Sh205.06 in that month.
Prices of fuel have since dropped with petrol being the only fuel whose price per litre is above Sh200 in Nairobi.
The estimates show that monthly collections between last July and December were highest in August at Sh29 billion, the month when consumption of the three fuels was highest.
Petrol, diesel and kerosene attract seven levies and two taxes namely VAT, Petroleum Development Levy, Road Maintenance Levy, excise duty, Petroleum Regulatory Levy, Anti-adulteration Levy, Railway Development Levy, Import Declaration Fee and Merchant Shipping Levy.
The estimates contradict KRA’s earlier concerns that a drop in consumption of fuel would adversely hurt tax collections from petrol, diesel and kerosene.
The Treasury had last year told Parliament that increasing the rates on existing taxes and introducing new ones would help generate an additional Sh289.3 billion in the year ending June.
The government is betting on higher taxes to help reduce the fiscal deficit amid growing obligations on debt servicing that have crowded out funds for the delivery of development projects.
Kenya has one of the highest taxation rates on fuel in the world ahead of economies such as South Africa. The fuel pricing schedule shows up to 38 percent per price of a litre of fuel is attributed to taxes.
The high taxes have been blamed for expensive fuel, with Kenya having the costliest diesel in the region with a litre of diesel going for $1.29, at par with Uganda and ahead of Tanzania where a litre is going for $1.19.
Kenya is also home to the second costliest petrol in the region, at $1.37 ahead of Tanzania at $1.19. In Uganda, a litre of petrol is going for $1.43.
