Review taxes to keep fuel prices stable after subsidy


Review taxes to keep fuel prices stable after subsidy


A petrol station attendant fuels a car in Nyeri town. PHOTO | JOSEPH KANYI | NMG

From October, Kenyan motorists will cease enjoying the fuel subsidy that is currently saving them Sh50.20 per litre of petrol and Sh53.70 for diesel.

This subsidy, which has run for 15 months, has helped shield Kenyans from an even steeper rise in the cost of living than is being experienced presently, even though it has come at a big cost to the taxpayer.

Now, with the Treasury putting an expiry date to the relief, the taxpayer ought to be prepared to feel the full force of higher crude prices that are not showing signs of abating.

The argument forwarded by those supporting an end to the subsidy, such as the IMF, is that it takes away funds that would otherwise have been deployed in ventures or areas of the economy that have a wider benefit and potential to generate jobs.

While this may well be the case, the negative impact of higher inflation on the continued recovery of the economy cannot be downplayed. The government must be willing to agree a trade-off, primarily through a review of some of the taxes that keep pump prices in Kenya high even when crude prices are favourable.

It must remember that its primary responsibility is service to the public, even if this means temporary tax rollbacks.

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