How KRA made Sh13.2 billion from fuel price increase
Lawmakers have moved to avert a looming economic crisis by adding the Ministry of Petroleum and Mining Sh15 billion to fund the fuel subsidy programme.
Fuel taxes rose by Sh13.2 billion in the six months to June as the government reaped from higher prices on the back of a spike in global crude prices.
An analysis of fuel consumption data from the Energy and Petroleum Regulatory Authority (Epra) shows that the Kenya Revenue Authority (KRA) collected Sh134.85 billion, a 10.8 percent increase from the Sh121.61 billion raised in the six months to June last year.
This has made the government the biggest beneficiary in the rise in fuel prices, which have led to subsidies. It has also helped the government to lessen the subsidy burden that hit Sh71 billion in the period under review.
Prices of diesel, super and kerosene have since January been rising due to global spike in crude costs, making the KRA the biggest beneficiary of the monthly fuel price review.
Higher pump prices offer higher taxes for every litre of fuel bought at the pump with the KRA collecting up to Sh5 more in June compared to a similar period last year.
Tax collected per litre of diesel increased by Sh5.67 to Sh51.65 in June from a similar period last year followed by tax raised from super that stood at Sh62.89per litre, an increase of Sh5.02 from a similar period last year.
Tax on kerosene which is the least used of the three fuels posted an increase of Sh4.86 per litre to Sh45.18 in June from a similar period last year.
There are seven levies and two taxes that are charged per litre of diesel, super and kerosene with excise duty accounting for the highest chunk per litre of the three fuels.
Others are Value Added Tax (VAT), road maintenance levy, petroleum development levy, railway development levy, anti-adulteration levy, import declaration fee, petroleum regulatory levy and merchant shipping levy.
The higher tax collections have mirrored the rise in pump prices despite the presence of a fuel stabilisation kitty that the government has been tapping to prevent prices from skyrocketing.
Pump prices in the two periods have increased by at least Sh30 per litre for each of the three fuels. In June, a litre of super retailed at Sh159.12 from Sh127.14 in June last year in Nairobi.
A litre of diesel rose to Sh140 from Sh107.66 while kerosene jumped by Sh30.09 to Sh127.94 per litre in the period.
Global costs of refined fuel had maintained a steady rise since the start of the year to cross the $100 – per barrel mark mainly due to the supply disruptions of the Russia-Ukraine war.
The jump in prices came despite the application of the fuel stabilisation programme without which pump prices would have been higher.
Taxes have been blamed for significantly contributing to the high pump prices prompting calls for a reduction of the levies. They account for at least 40 percent of the price of a litre of the three fuels.
Petroleum Development Levy and Value Added Tax are targeted for reduction in a bid to lower pump prices in the long-term by cutting the contribution of taxes and levies.
The outgoing Parliamentary committee on Finance and National Planning approved a Bill that seeks to cut PDL by nearly half to Sh2.90 per litre and lower Value Added Tax on petroleum products from eight to four percent.
The 12th Parliament did not adopt the Petroleum Products’ (Taxes and Levies) Amendment Bill, 2021 and the legal changes will be a priority item for the new Parliament.
The new house to be sworn in this month will have to republish the Bill but it is legally allowed to use the already tabled report to pass the cuts on PDL and VAT.
