Move to re-assess fuel taxes welcome

The valve to Kenya’s ever surging economic pressure can be released in one fell swoop if the cost of fuel is made predictable and affordable.

Predictability is a key factor of production, and as for the cost, the palpable anger following announcements of increased costs of fuel should be taken seriously.

As an important enabler of economic growth, poor pricing of fuel must not be allowed to stymie economic growth as is currently the case.

It is unfortunate that the helplessness that followed recent spikes in the cost of fuel saw an increase in the price of food products, transportation and farming, and forced consumers and producers to believe that only an executive order by the President would revise taxes.

Further, the increasing cost of fuel is unattainable because with other countries having cheaper fuel, it makes the cost of local commodities expensive and forces entry of imports at the expense of locally-manufactured products.

This makes it difficult to cushion the country from the tough economic times which have been made worse by the Covid-19 pandemic knocks.

Questions abound why Kenya’s cost of diesel and petrol are the highest in East Africa, despite countries such as Uganda and Rwanda which are landlocked relying on the Port of Mombasa to import their petroleum products.

In this regard, efforts by Parliament to lower taxes and levies on petroleum products must be seen through this lens and through the Finance Bill of 2021.

Following growing public anger and pressure over soaring prices, eyes are fixed on the Energy committee of the National Assembly to initiate the process of bringing down the cost of fuel.

This is because Parliament scrutinises the Finance Bill, which is the legal instrument the National Treasury and Ministry of Energy use to determine taxes and other levies. This is a sign of the silver lining forming in the horizon.

As Treasury prepares to table the Finance Bill in Parliament before April 30, so that it can be approved by the President by June 30, the levies and two taxes that inform the Energy and Petroleum Regulatory Authority in setting fuel price must be dealt with.

Indeed, taxes are the root cause of the high cost of fuel, gobbling up to 46 per cent of the consideration.

This means that if taxes are brought down significantly, the cost of fuel will drop.

This will bear a positive knock-on effect on all sectors of the economy which is a good thing.