Matatu fares to be increased in September over new tax levy
- Five years ago, the Government tried to introduce the levy on fuel products but the plan was put on hold for a period of three years.
- However, in 2016, the grace-period was extended by another two years, an extension which will lapse within the next few weeks.
Matatu fares are set to increase after a Government move to introduce 16 per cent Value Added Tax (VAT) on fuel products next month.
According to Matatu Owners Association chairman Simon Kimutai, instead of acting on tax evaders, the Government has decided to levy 16 percent tax on fuel products to collect more revenue.
“Additional fares are painful to commuters but the increase in fare prices has to take effect because taxation of fuel translates to an added cost to public service vehicles operators,” he said in a statement.
Kimutai however assured commuters that the increase will be “reasonable” as it will be based on the calculations of the additional cost.
For town services, the Matatu fares increment is expected to be between Ksh.10 and Ksh.20 depending on distance covered, he revealed.
The Consumers Federation of Kenya (COFEK) has however opposed the increase of levy on fuel products.
In a statement released on Friday, COFEK Secretary General Stephen Mutoro said the new levy is not in line with the new Constitution.
“The proposal to add VAT on fuel is driven by the IMF and not the Kenyan Government.
“It does not meet the threshold of Article 10 of the Constitution. If allowed, the move will put the taxation levels on a liter of petrol to a staggering 70percent,” Mutoro said.
According to him, for President Uhuru Kenyatta’s Big Four Agenda to be realized, the ordinary citizen’s tax burden should be lessened on all forms of energy.
Mutoro further added that should the proposal be implemented, the cost of transport will radically rise leading to inflation of other products.
“Our plea therefore is that the proposal is immediately put on hold to allow further stakeholders consultations,” he said in the statement.
The Consumer Federation has threatened to seek legal redress should the Government ignore their pleas and carry on with implementation of the tax levy.
Five years ago, the Government tried to introduce the levy on fuel products but the plan was put on hold for a period of three years.
However, in 2016, the grace-period was extended by another two years, an extension which will lapse within the next few weeks.
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