Fuel tax must be implemented from September 1: Rotich

Treasury CS Henry Rotich has insisted that the 16percent fuel tax will be implemented on September 1 as it is law.

This means that effective midnight, fuel prices will go up.

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According to the CS, the move to suspend implementation of the fuel tax by two years is null and void.

Matatu operators had earlier indicated that they would increase fares by 20percent starting September 1.

On Wednesday this week, Parliament suspended the implementation of the new Value Added Tax (VAT) on petroleum products following public uproar.

Consumers Federation of Kenya later raised concerns that an increase in fuel prices would result on a hike on consumer price surges.

The law had been continuously suspended to date, but the window closes on August 31.

IMF has been piling pressure on the government to end the suspension and raise its revenues and reduce budget deficits while slowing down spiralling debt.

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 at 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 comprises 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.