A litre of petrol inside Nairobi’s Central Business District (CBD) cost a mere Ksh.97.28 in June of 2015.
Today, the same litre of petrol will set one back Ksh.134.72 to mirror a 39 per cent surge in costs in just six short years.
The spike in fuel costs may be traced to an array of reasons including a weakened shilling, inflation and the usually uneven changes to international crude prices which largely take a cyclical flow over time.
However, according to the Energy and Petroleum Regulatory Authority (EPRA, taxes have borne higher prices for the petroleum products by far than any other reason given.
While appearing before the Finance and National Planning Committee of the National Assembly on Tuesday, EPRA Director General David Kiptoo mapped out recent changes in taxation for fuel covering the period between June 2015 and September 2021.
The mapping out of the taxation changes uncovered the elephant in the room even as the Gladys Wanga-led committee pushed to establish reasons behind the recent surge in petrol costs.
For instance, the Excise Duty Act of 2015 lifted excise duty on diesel to Ksh.10.05 from Ksh.8.24.The 2016 Finance Bill would meanwhile introduce excise duty on the supply of kerosene at Ksh.7.25 a litre.
Legal Notice 239 of 2018 would further lift excise duty on super petrol, diesel and kerosene to Ksh.20.51, Ksh.10.84 and Ksh.7.48 per litre from Ksh.19.51, Ksh.10.31 amd Ksh.7.21 respectively.
In July 2019, excise duty on super petrol was increased by 5.15 per cent while excise duty on all three petroleum commodities went up by 4.94 percent in October last year.
In other changes, the road maintenance levy for petrol and diesel moved to Ksh.12 from Ksh.9 per litre in June 2015 and to a further Ksh.18 per litre in July the following year.
June 2018 would see the petroleum regulatory levy raised from 12 to 25 cents per litre.
In July 2020, the petroleum development levy (PDL) on petrol and diesel was hiked fro 40 cents to Ksh.5.40
Nine taxes
Kenyans today pay for nine different taxes on the purchase of fuel which contribute to nearly half the total costs of the petroleum products.
The nine taxes include excise duty, the road maintenance levy, the petroleum development levy, the petroleum regulatory levy, the railway development levy, the anti-adulteration levy (for kerosene) and the merchant shipping levy.
Others are the import declaration fee and the value added tax (VAT) which is currently the subject of a petition seeking to quash the tax to alleviate the pain at the pump.
In total, taxes and levies for petrol, diesel and kerosene presently add up to Ksh.58.81, Ksh.46.46 and Ksh.41.14 respectively.
While the Finance and National Planning Committee put EPRA under pressure to explain high taxation on the products, Kiptoo reminded MPs that the mandate of tax rests in both the National Assembly and Treasury absolving itself of blame.
“Taxes is really in the purview of the National Treasury from a policy standpoint and ultimately Parliament. The taxes however do have a compounding effect. When the landed costs of petrol increases, taxes also rise. This taxes are almost at par with the landed cost,” he said.
Regionally, it remains ironically cheaper to buy fuel in neighboring Uganda, Tanzania and Rwanda than it is to buy in Kenya.
EPRA has attributed the cheaper prices for fuel in peer countries to a lower taxation regime and subsidy programs by regional governments’ to cushion their citizens.
“The Rwandan government has for instance recently reduced the road maintenance levy by an equivalent Ksh.9.14 and Ksh.7.29 per litre for super and diesel for the period August to October 2021. This is an intervention by the Rwandan government to be able to cushion consumers against the spike in prices,” added Kiptoo.
In Kenya, the government run its first subsidy program for petroleum products between mid April and mid-September.
The fund has however fallen of the mark subsequently as it seemingly dries up to leave Kenyans exposed to exorbitant fuel costs.
Credit: Source link