The sports category has moved to a new website.

Kimani Ichung'wah defends VAT increase on fuel with comparison to Uganda & Tanzania

184 MPs on Wednesday June 21 voted to increase VAT on fuel from 8 per cent To 16 per cent

National Assembly majority leader Kimani Ichung'wa

Kenyans are set to face harsh economic challenges following the approval of a contentious proposal in the Finance Bill, 2023 by a majority of Members of Parliament.

The proposal calls for an increase in the Value Added Tax (VAT) on fuel from the current 8 per cent to 16 per cent. This decision has sparked heated debates and raised concerns about the potential impact on the cost of living and the overall economy.

After a fiery debate that pitted Azimio and Kenya Kwanza MPs against each other, 184 Members of Parliament voted in favour of the VAT increase, while 84 opposed the amendment.

This outcome has paved the way for a potential rise in fuel prices by more than Sh10. The approval of this measure could significantly affect the livelihoods of ordinary citizens, as fuel costs play a crucial role in various sectors of the economy.

ADVERTISEMENT

National Assembly Majority Leader Kimani Ichung'wah acknowledged that the increase in VAT would lead to higher fuel prices but pointed out that Kenya's VAT rate would still be lower compared to neighbouring countries.

"Our VAT rate at 16 per cent, in the region where our country is the market leader, VAT in Kenya even at 16 per cent is still the lowest. Uganda being at 18 per cent on fuel, our friends in Tanzania and Rwanda also at 18 per cent," he said.

The government aims to generate additional tax revenue of Sh50 billion for the financial year 2023/2024 through this adjustment in fuel tax.

ADVERTISEMENT

The National Assembly is reviewing multiple suggested changes to the Finance Bill, 2023, which is currently in the Committee of the whole House stage.

In the June fuel prices review, the price of super petrol was reduced by Sh0.66 per litre, bringing the retail price down to Sh182.04.

Additionally, diesel prices also witnessed a decrease, with a drop of Sh1.12 per litre. The new retail price for diesel will be Sh167.28 per litre.

ADVERTISEMENT

With the law passed, it is expected fuel prices up which will generally see the increased cost of living.

JOIN OUR PULSE COMMUNITY!

ADVERTISEMENT

Eyewitness? Submit your stories now via social or:

Email: news@pulselive.co.ke

ADVERTISEMENT