Kenya-based taxi hailing company Little has increased the amount paid out to its drivers per kilometre by Sh4 in the wake of the 16 per cent VAT tax on petroleum products.
The firm said that the pay increase, which was effected Tuesday midnight, would however not translate to higher fares for riders.
“Currently we are paying our drivers Sh40 a kilometre, Sh4 a minute, Sh100 base fare and Sh250 minimum. Which is the highest in the market. We plan to increase the price to Sh44 a kilometre,”said Craft Silicon founder Kamal Budhabhatti.
He added that riders would continue paying the same amount, which is Sh35 per kilometre.
The new pay came as a fuel shortage hit Nairobi on Wednesday with petrol stations running out on supply.
“This has impacted our drivers and their business as well. With this fact in mind, you might experience longer waiting as the available drivers may be a little far from your location. We request you to understand our situation and would like to apologise in advance,” said Mr Budhabhatti in a statement to business partners.
US firm Uber last week stated it was gathering driver data via a cost survey to gain insights on what changes may be made to its current pricing model due to the new fuel tax that raised the price of a litre of petrol to Sh127.80.
The Treasury has confirmed that petroleum products have started attracting VAT in line with Kenya’s promise to the International Monetary Fund (IMF) two years ago.
VAT was first introduced on petrol, diesel, kerosene and jet fuel in the VAT Act of 2013, with a three-year grace period that would have seen the levy come into force in 2016 when it was once again deferred to September 2018.
The new tax comes as cab drivers lament that high fuel prices, lower fares and the rising number of taxis on roads make conditions tough for them, hurting their earnings.