National Assembly Speaker Justin Muturi on Thursday rejected a proposal to delay the 16 percent tax on cooking gas by three years and remove value-added tax (VAT) on diesel, petrol and kerosene.
Speaker Muturi said the proposals would derail the revenue collections and hurt financing of development projects in the year to next June.
Dagoretti South MP John Kiarie had proposed to delay the imposition of a 16 percent VAT on cooking gas to July 1, 2024 and removal of a similar tax on petroleum products in a bid to protect households and consumers struggling with the financial hardships of the coronavirus.
The 16 percent VAT on liquefied petroleum gas (LPG) will be re-introduced from July 1, pushing the cost of the commodity by at least 350 more for the 13-kilogramme cooking gas.
“The proposals would have far-reaching implications on revenue collection and would greatly affect the implementation of the national budget,” Speaker Muturi ruled Thursday evening.
The proposals were contained in amendments to the Finance Bill, 2021 whose debate started Thursday.
The push to remove the 16 percent VAT on fuel is meant to prevent the prices of diesel, petrol and kerosene from skyrocketing.
VAT is one of the two taxes and nine levies that the Energy and Petroleum Regulatory Authority (Epra) takes into account when setting fuel prices.
The taxes and levies have been blamed for the high cost of super petrol, diesel and kerosene. VAT accounts for Sh9.42 for every litre of super petrol and Sh8.30 and Sh7.72 respectively per litre of diesel and kerosene.
Fuel prices hit record highs in the monthly review for March with a litre of petrol retailing at Sh122.81 in Nairobi, while diesel rose to Sh107.66— the highest since December 2018.
The State has since kept the diesel and kerosene prices unchanged since March, in a bid to contain public anger in an economy where households and firms are grappling with layoffs, salary cyst and depressed sales.
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