Fuel prices: Don’t celebrate just yet, union warns

The Finance Bill could be assented to later than September 1, the date when the implementation of the new tax is to take effect, which means companies may have a window to increase fuel prices.

Also Read: Parliament suspends 16pc V.A.T on petroleum products after public uproar

According to the Consumers Federation of Kenya, though Parliament suspended the implementation of the 16 percent Value Added Tax (VAT) on petroleum products on Wednesday, the order could still take effect.

“We urge ERC to formally caution fuel marketers on increasing their pump prices between September 1 and the time of assent to the Finance Bill will be required to be make refunds together with respective interest to consumers,” COFEK said in a statement.

The union further noted that an increase in fuel prices will result in a hike on consumer price surges which may not come down even after eventual assent of the Finance Bill.

The House approved suspension of the new tax until September 1, 2020; it had been proposed by National Treasury CS Henry Rotich.

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Fuel products are part of Kenya’s most taxed commodities. On landing at the port of Mombasa, a litre of Super Petrol is priced at Ksh.57.53.

Storage and distribution charges amounting to Ksh.4.41 are added to this figure, while a profit margin for importers is set at Ksh.7 a litre. Dealers have a margin of Ksh.3.89.

Under taxes and government levies, a total of Ksh.39.37 is collected from every litre of petrol purchased.

This comprising Ksh.19.90 in excise duty, Ksh.18 for road maintenance, 65 cents for petroleum development and regulation while 82 cents are charged on every litre for development of railway network.

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