Petrol station dealers along the border towns are staring at losses following the introduction of 16 percent VAT, a spot check by the Star shows.
Motorists and kerosene users on the border towns are trooping to Uganda, Tanzania, Ethiopia for their purchases.
For instance, petrol retails at Sh109 at Isebenia, Tanzania while it sells at Sh 130 at Sirare in Kenya.
In Moyale town, petrol sales at Sh 140 about Sh65 more than what it sells along the Ethiopian centres bordering Moyale. In Busia, fuel retails at Sh130 while it sells at Sh108 in Busia of Uganda barely 500 metres away.
Bonnie Sidika, a fuel dealer at Muhuru Bay said the sales have reduced since the tax was effected.
Sidika said he previously sold 200 litres of petrol daily to fishermen who are his main clients but this has dropped to 130 litres
"For the past three days my sales have gone down. Most consumers sneak across the boarder while some have just cut down on purchases," he said.
Michael Oketch, a boda boda operator in Muhuru Bay, Migori county at the border of Kenya and Tanzania said he no longer fuels at the local stations because it is expensive.
“Why do I have to buy fuel at Sh130 when I can get the same at Sh109, it does not make sense,” he said adding that the towns are just metres apart.
According to the Chairman Consolidated Bank of Kenya, Dr Benson Ateng' the problem will extend to all the players in the economy in what he calls the second round of effects.
“Increase in fuel prices will create high cost of living and inflation to the economy. Even the cost of electricity will hype as cost of fuel is a determinant in the summation of electricity,” he said.
He said, the government should instead cost cutting measures.
“In as much as we cannot avoid the taxes due to the many projects, we must cut the wastages arising from effects of corruption,” he said.