Kenya: Governors Call for Review of Fuel Levy

Photo: Capital FM
A pump attendant fuels a matatu at a petrol station in Nyeri on September 2, 2018.
4 September 2018

Governors have warned that the implementation of the 16 per cent tax on fuel is likely to renew the incessant clamour for higher pay by workers to cushion themselves against the high cost of living.

This would adversely affect the country's development plans, according to Council of Governors chairman Josphat Nanok.

In a statement, Mr Nanok asked President Uhuru Kenyatta to assent to the amendments on the Finance Bill 2018 furthering the extension of the exemption to allow for more engagements on the matter.

He said the National government should carefully assess the impact of its action saying: "service delivery in the counties will be affected. Employers will therefore bear the brunt of this increase on the fuel levy."

"I call upon the national government to review the 16 per cent VAT on petroleum products as it will slow down the momentum on economic growth already experienced countrywide and to a very large extent make investors shy away from injecting their resources in our economy," he continued.

Governor Nanok said the planned tax imposition would mean the tax burden weighs even heavier on fuel prices triggering a rise in prices of basic commodities and transport.

An increase in fuel prices will join a growing list of taxes that experts have warned could hit investments and lead to loss of jobs.

The high prices for petroleum products is also likely to increase smuggling of the products offering cheaper prices and consequently negatively affecting the attainment of the Big Four Agenda.

"Kenyans are already heavily taxed and overburdened by the high cost of living in comparison to their neihbours in east Africa. Recent reports reveal that Kenya is one of the k0st unequal countries in the region with 42 per cent of its population living below the poverty line," said Governor Nanok.

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