Cooking gas prices will fall by around Sh430 for the 13-kilogramme if Parliament adopts a government proposal to scrap three taxes on the commodity.
A brief from State House on Thursday said the William Ruto administration will ask MPs through the Finance Bill 2023 to exempt cooking gas from the eight percent Value Added Tax (VAT), the 3.5 percent Import Declaration Fees and the Railway Development Levy of two percent.
President Ruto has outlined an ambitious plan to remove taxes on cooking gas tax-free in a bid to make it more affordable especially amongst low-income homes as part of transitioning to clean cooking by 2030.
The Finance Bill 2023 will be tabled in Parliament before June.
Cooking gas prices are currently at record highs with the 13-kilogramme going for an average of Sh3,300, mainly attributed to the VAT and global high prices of crude.
“To reduce the cost of liquefied petroleum gas (LPG) and make it affordable, reduce the use of biomass fuel and destroy our forests, the Bill proposes to exempt LPG from VAT,” reads the State House brief.
“It further proposes to exempt LPG from Railway Development Levy (RDL) and Import Declaration Fees (IDF).”
The proposal will knock off Sh256 in VAT, Sh112 in IDF and Sh64 for RDL for the 13-kilogramme based on the current prices.
Parliament reinstated a 16 percent VAT on cooking gas in July 2021, ending a five-year period when the tax had been frozen as the government sought to lower prices and boost uptake.
Return of the tax saw gas price jump by up to Sh350 as dealers passed the levy to consumers amid soaring prices globally. The tax was halved last year but prices have not dropped as anticipated.
The proposal, if adopted, will retain the Petroleum Development Levy of Sh0.40 per kilogramme as the only tax on cooking gas.
The Business Daily had not seen the Finance Bill 2023 to be tabled in Parliament by the time of going to press.
Official data shows that 24 percent of Kenyan homes use cooking gas, making it the second most popular after firewood.
It however remains unclear if the proposals will also apply to cylinders of cooking gas amid promises by Mr Ruto to lower the prices by at least Sh300.
Cylinders of cooking gas attract a VAT of eight percent, IDF and RDL at the rate of 3.5 percent and two percent respectively on the Cost, Insurance and Freight per container.
