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How fuel prices will look after William Ruto’s 16pc VAT

Finance Bill 2023

A customer attendant fuels a car at Rubis petroleum station on Koinange Street, Nairobi on April 13. The Finance Bill 2023 proposes to raise VAT on fuel from 8 percent to 16 percent. 

Photo credit: Dennis Onsongo | Nation Media Group

Pump prices will nearly breach the Sh200 per litre mark if Parliament approves a proposal by President William Ruto’s administration to double Value Added Tax (VAT) on fuel in a plan that could make Kenya have the highest prices in the region.

An analysis by the Business Daily shows that a litre of Super will rise by Sh13.51 to Sh196.21 after the additional taxes while diesel will increase by Sh12.40 to Sh180.88 if lawmakers adopted the proposal in the Finance Bill to double VAT to 16 percent.

In total, it is projected that VAT collections will double to an estimated Sh128.98 billion annually or Sh10.7 billion per month. The collections, however, depend on fuel consumption and global prices of crude oil.

President William Ruto on Sunday defended the proposal to double VAT on fuel on the grounds that Kenyans pay smaller taxes compared to similar economies and that higher levies will provide the much-needed cash to fund development projects such as the building of roads.