The government will generate an extra revenue of Sh5.3 billion monthly through the application of the 16 per cent VAT on fuel products.
This is if the volume of the fuel that was imported in the country in the month of August remains constant.
According to data from the government, 117,801,117 litres of super petrol entered the country in August, while importers brought in 213,605,360 litres of diesel and 58,679,579 litres of kerosene.
On imposing the 16 per cent VAT, a litre of super petrol will generate revenue of Sh14.71 in value added tax.
This will translate to Sh1,732,854,431 per month if the importation of super petrol remains constant at 117,801,117 litres.
Diesel will on the other hand rake in an impressive Sh2,774,733,626 on 213,605,360 litres of imported fuel, with each litre generating Sh12.99 value added tax.
Kerosene will generate Sh765,181,710 monthly with a Sh13.04 VAT charge on every litre.
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While directing that the 16 per cent VAT will take effect on September 1, Treasury CS Henry Rotich said the move was aimed at improving tax collection efficiency.
He reasoned that the VAT incurred by distributors of petroleum products to bring in exempt supplies could not be recovered by the government.
It is, however, more likely that consumption will go down as a result of the high cost of fuel.
A section of motorists are likely to reduce unnecessary mobility with their vehicles in a bid to cut expenditure on fuel.
But in the event that fuel consumption remains constant, Treasury will by the end of this year raise an average of Sh21.1 billion from VAT on all petroleum products.
In perspective, the funds can comfortably cater for free primary education which requires Sh13.4 billion in the 2018/19 financial year.
The amount can also cover Free Maternal Healthcare programme and lease medical equipment at a cost of Sh13.7 billion.
The reminder can go towards the internship programme for doctors, clinical officers and nurses which requires Sh2.9 billion.
Alternatively, the government can utilise the funds by offering cancer services (leasing of Computed Tomography Scanners Equipment) at a cost of Sh7 billion.
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