Parliament suspends 16% V.A.T on petroleum products after public uproar

The National Assembly on Wednesday afternoon suspended the implementation of 16 per cent Value Added Tax (VAT) on petroleum products following public uproar.

The amendment to Clause 18 of the Finance Bill, 2018, was sponsored by Minority Whip and Suna East MP Junet Mohamed.

The House suspended the implementation of the VAT, which was to go into effect on September 1, 2018, for a period of two years.

In the event that the suspension by the Assembly is approved by President Uhuru Kenyatta, then the new interest rates will now take effect on September 1, 2020.

The House has this afternoon approved an amendment to Clause18 of the Finance Bill, 2018, sponsored by Minority Whip @JunetMohamed ,suspending the implementation of 16% VAT on fuel,which was to take effect on 1st Sept.2018, for a period of 2 years, citing the high cost of living

— National Assembly KE (@NAssemblyKE) August 29, 2018

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.

Due to these charges, the cost of a litre that cost just over Ksh.57 appreciates to the current price of Ksh.112.20 in Nairobi.