President William Ruto said after taking office that his government would remove the subsidy programme and seek sustainable ways of bringing the cost of fuel down. However, this has not been the case and now consumers are left with a situation where petrol users are subsiding the cost of diesel. Our position on the cost of fuel has always been that the State should strive to keep them low, but there are better ways of achieving the same. Dr Ruto’s government should keep its promise of scraping fuel subsidies and replace it with a sustainable way of giving consumers reprieve. Energy is a critical input for production and transportation in nearly all economic sectors, with high energy costs having a multiplier effect on inflation The government could opt to reduce some taxes like the eight per cent value-added tax or suspend them until such a time that the global petroleum products prices would have stabilised. Opportunity exists to reduce petroleum taxes and levies starting with the petroleum development levy (Sh5.40 per litre) which was justified by funding petroleum subsidies.
The other is axing or postponing the annual inflation adjustment on petroleum excise duties. Any downward revision of taxes will of course impact the Treasury's capacity to fund budget obligations, and this is why any review of petroleum taxes should be part of a wider exercise to revisit the 2022/23 budgets to cut out those areas which are not urgent or necessary.
