Kenya’s fuel taxes beat South Africa, US on higher VAT

Tuesday July 11 2023
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Kenya has joined the league of countries collecting the highest taxes on fuel, calculated as a percentage of the final price, overtaking bigger economies such as the US and South Africa.

An analysis by the Business Daily shows that taxes in Kenya now account for 40 percent of the cost of every litre of super petrol and diesel, compared to 14 percent in Illinois State— the state with the highest fuel taxation in the US— and South Africa at 30 percent. Ethiopia does not tax fuel.

Though Tanzania has the cheapest fuel in the region, the ratio of taxes as a percentage of the pump price ties with Kenya at 40 percent.

Kenya charges seven levies and two taxes on fuel and last week doubled Value Added Tax (VAT) on the commodity to 16 percent, further increasing the taxation component for every litre of super petrol, diesel and kerosene.

A litre of super petrol and diesel jumped to Ksh195.53 ($1.39) and Ksh179.67 ($1.27) respectively in Nairobi in the wake of the imposition of the new VAT rate from the start of this month against the backdrop of public outrage over the heavy taxation of fuels.

Read: Kenya fuel costs remain high amid marginal drop in pricing


President William Ruto defended the decision to double VAT despite it having triggered a fresh surge in the cost of living given that Kenya’s economy heavily relies on diesel.

“We are not overtaxing ourselves. But to balance it out, as we add eight percent on the same fuel, I have removed the Railway Development Levy (2.0 percent) and Import Declaration Fee (3.5 percent),” Dr Ruto said recently.

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