Kenyans should brace themselves for more agony at the pump, as the fuel price could rise by more than Ksh.10 if the Finance Bill 2023 is passed by parliament.

The bill, currently before the Finance and National Planning Committee, seeks to reverse a decision reached in 2018 to decrease VAT on petrol to 8% to provide relief to Kenyans.

By changing a paragraph that tries to unify the VAT laws, the VAT on petrol will double to 16%, raising the fuel price in the country by more than Ksh.13 per litre based on current pricing.

Senior Tax Manager Fred Kimotho explains that One of the reasons the government is moving to eliminate the 8% could be to harmonize the VAT act, which has two clusters adding that The rate is 0. The percentage is 16%, and The only commodity charged at 8% is fuel

This idea will drastically raise the cost of fuel, a vital commodity in Kenya's economy. This will knock on production costs and consumer goods in general.

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PHOTO | COURTESY fuel station

Petroleum products are one of the most heavily taxed commodities in the country, with a total of nine levies, including the Road Maintenance Levy, excise tax, Petroleum Development Levy, Petroleum Regulatory Levy, Railway Development Levy rate, Anti-Adulteration Levy, Merchant Shipping Levy, and the Petroleum Development Levy.

The administration's recent decision is unhelpful since it undermines efforts to facilitate fuel importation from the United Arab Emirates following a deal with the Middle Eastern government.

The agreement, which was supposed to reduce fuel costs, allowed Kenya to postpone payments for oil imports for up to six months to relieve pressure on the demand for dollars.