Increasing cooking gas prices a painful misstep

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Increasing cooking gas prices a painful misstep


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LPG vendor in Nyeri. FILE PHOTO | NMG

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Summary

  • The levy was to be introduced last year but it got postponed to cushion Kenyans from Covid-19 pandemic economic fallout.
  • The same problems are still with Kenyans and, therefore, it would be wise to suspend the Sh350 increase on gas.
  • Currently, the 13-kilogramme cooking gas retails at an average Sh2,250, meaning that it would now increase to Sh2,610 when the new tax measures come into force.

The decision by the government to introduce a 16 percent value added tax (VAT) on cooking gas is ill-advised and would cause already struggling consumers more pain.

The Kenya Revenue Authority (KRA) said it would impose the 16 percent tax at the start of the new financial year in July in what is set to push the commodity out of the reach of most households whose incomes are already depressed thanks to the raging Covid-19.

Those who are unlucky are already out of jobs as employers responded to the sting of the disease that has restricted operations and cut revenues to painful levels.

The KRA is increasing VAT in line with the Finance Act that reinstated this tax on liquefied petroleum gas (LPG), but delayed the levy for one year to due to concerns about the cost of living.

The levy was to be introduced last year but it got postponed to cushion Kenyans from Covid-19 pandemic economic fallout.

The same problems are still with Kenyans and, therefore, it would be wise to suspend the Sh350 increase on gas.

Currently, the 13-kilogramme cooking gas retails at an average Sh2,250, meaning that it would now increase to Sh2,610 when the new tax measures come into force.

Expensive gas will add to rising energy prices that have become a headache for Kenyans. It would take a huge number to the unclean fuels whose health effects are a worry.

The idea of removing VAT on cooking gas was to encourage mass adoption of clean energy.

Most households have since ditched kerosene, wood and charcoal.

A reversal of the policy would see some struggling households revert to wood or charcoal.

Such a move could spell doom to the shrinking forest cover in the country as well as calls to cut carbon emissions to save the planet from the raging climate change.

Also, wood fuel and charcoal have been associated with respiratory diseases. The new law would reverse the gains made in reducing health complications caused by dirty fuel.

While the KRA may collect more revenues, this tax will leave consumers worse off. The State should instead find ways of broadening the tax base.

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