EDITORIAL: Move to impose VAT on cooking gas wrong

The Treasury’s bid to reintroduce value-added tax (VAT) on cooking gas will ultimately reverse gains made in weaning households off dirty fuel.

Kenya needs affordable cooking gas to cut reliance on biomass sources like wood and charcoal as well as Kerosene. So far, the effects of removal of VAT on cooking gas in 2016 has been notable on pricing and increased consumption.

Average cooking gas prices have dropped from Sh2, 300 to slightly above Sh2,000 while demand for liquefied petroleum gas (LPG) has increased by more than four times since 2017.

This is a clear signal that imposition of the 14 percent VAT on cooking gas, which will see the 13-kilogramme cylinder rise by about Sh300, would roll back the gains at a time when Kenya has made a global commitment to deepen the use of clean energy.

The health and environmental implications of increased use of traditional fuels like charcoal and firewood are grave.

More than 21,500 Kenyans die each year from cooking with traditional fuels like charcoal and firewood, government data shows. The health risks are greatest in rural areas where 90 percent of households use wood stoves compared to 70 percent nationwide, Kenya’s first household survey on energy usage in cooking found last November.

It also found that 80 percent of households relied solely on either charcoal or firewood as their primary cooking fuel, with charcoal worth Sh68 billion consumed each year.

The widespread use of dirty fuels also contributes to climate change and deforestation at a time when Kenya’s forest cover has dipped below the acceptable level of 10 percent of the country’s mass.

These statistics should be sobering enough for the Treasury to drop its bid for the new cooking gas levy.

The Treasury reckons that it is removing a range of tax exemptions including the 14 percent VAT relief on cooking gas to make up for revenue lost to the impact of the Coronavirus disease crisis.

What is the use of generating additional tax in plans that put the environment and livelihoods at risk? We support the National Assembly’s Finance and Planning Committee, which wants the gas levy deleted from the Bill that will introduce new taxes from July 1.