The bid to retain the 16 percent tax on cooking gas by the Kenya Revenue Authority (KRA) has failed.
This follows the law aiming to make the commodity affordable. Initially, there was a petition by KRA, for parliament to retain the tax, failure to which it claimed losing out on Sh4.02 billion in revenue.
Additionally, the proposal met rejection after the National Assembly Committee on Finance and National Planning, stated, it risks pushing the commodity out of reach of households.
“Retain the value-added tax (VAT) rates for petroleum products and LPG as they currently are. The reduction of the VAT rate on the products will have an adverse revenue impact on the government,” KRA said in its petition.
The reduction of the VAT on cooking gas is contained in the Petroleum Products (Taxes and Levies) Amendment Bill, 2021 passed by the committee and awaits house approval to become law. The push to lower the tax on cooking gas comes barely six months after its re-introduction that prompted prices to shoot up.
The price of the 13-kilogramme shot to Sh2,800 in September from Sh2,000 in June, highlighting the adverse effects of the tax.
The Treasury had scrapped VAT on cooking gas in June 2016 to cut costs and spur uptake of clean fuel in place of kerosene and charcoal.
Cooking gas prices stood at an average of Sh2, 231 in June 2016, and dropped to below Sh2, 000 in October four months after the scrapping of the 16 percent VAT.
Kenya is banking on the removal of the VAT and price controls after completion of the Kipevu Oil Terminal to lower the price of cooking gas and boost uptake.