Tougher times ahead as KRA moves to adjust excise on fuel

This will see pump prices further increase, leading to a rise in the cost of living.

In Summary

•The rate as determined by Kenya National Bureau of Statistics will be effective from October 1, subject to approval by the CS Treasury Ukur Yatani.

•A recent increase in the prices of petrol, diesel and kerosene has caused an uproar in the country.

Attendants at a petrol station./FILE
Attendants at a petrol station./FILE

Fuel prices in Kenya could further to rise if adjustment on excise duty rate on petroleum products by Kenya Revenue Authority is effected.

This is from October 1, which will come about two weeks since Kenyans were hit by historical pump prices which have led to an uproar in the country.

On September 15, the Energy and Petroleum Regulatory Authority (EPRA) announced new retail prices which saw taxes on super petrol commonly used by motorists go up to Sh58.81 a litre, from a total of Sh56.42 per litre in march this year.

Pump prices in Nairobi are currently at Sh134.72, Sh115.60 and Sh110.82 for a litre of super petrol, diesel and kerosene, respectively. 

In a notice on August 10, KRA commissioner general Githii Mburu announced rates on excise duty will be adjusted using the average inflation rate for the 2020/2021 financial year of 4.97 per cent.

 The rate as determined by Kenya National Bureau of Statistics will be effective from October 1, subject to approval by the CS Treasury Ukur Yatani.

A group of youth from Korogocho under the banner name UFANISI Centre have moved to court to oppose the adjustment.

They asked the court to issue an order quashing the decision by Mburu to adjust excise duty rates for petroleum products. 

Isaiah Odando and Wilson Yata-officials of UFANISI say KRA and EPRA  have ignored proper public participation of Kenyans before adjusting the excise duty rates. 

Through their lawyer Kenneth Amondi, the youths say the adjustment of excise duty is a burden to already overtaxed Kenyans. 

“The same was devoid of proper public participation at a time when Kenyans are reeling from the economic consequences of the covid-19 pandemic thereby compromising the peoples entitlement to social justice,” say the duo. 

The government had in April introduced a subsidy fund to cushion consumers from an increase in prices, which saw Treasury compensate Oil Marketing Companies.

This is after their margins were cut to Sh8 from Sh12 per litre, with the government shouldering the difference using the petroleum development levy fund.

There are however no clear regulations guiding the use of the fund, which is believed to have led to a pause on the government subsidy plan.

“The  same should for all intents and purposes be ploughed back to cushion the retail price against price hikes,” they say. 

Ufanisi center is a community based organisation which operates within Korogocho in Ruaraka constituency.

Its membership are mainly self-employed youth who depend on matatus and boda bodas to move their various merchandise to markets.

They are currently facing high cost of living which is a burden and too hard to bear, their representative say in the petition.

“An increase in fuel prices will definitely have ripple effects in other sectors of the economy in terms of higher transport costs, general increase in prices of basic goods and services and costs of agricultural inputs,” the group says.

They want the court to declare that parliament has failed to exercise its mandate to cushion Kenyans against the spiraling effect of fuel tax by deliberately sanctioning taxes on petroleum products, which now constitute almost half the price. 

Also sought is an order directing KRA, EPRA, CS Treasury, Petroleum and Speaker of National Assembly to come up with clear guidelines on the management and application of monies received by the petroleum subsidy fund from the petroleum development levy.