Matatu owners announce fare increment
Kenyans who use public transport will have to dig deeper into their pockets after governments move to introduce 16 per cent Value Added Tax (VAT) on fuel products in September.
Confirming the increment, Matatu Owners Association chairman Simon Kimutai assured commuters that the increase will be “reasonable” as it will be based on the calculations of the additional cost.
In a statement, Kimutai wondered why the government had decided to levy 16 percent tax on fuel products to collect more revenue instead of acting on tax evaders.
“Additional fares are painful to commuters but the increase in fare prices has to take effect because taxation of fuel translates to an added cost to public service vehicles operators,” Kimutai said.
He added that for town services, the fares increment is expected to be between Sh10 and Sh20 depending on distance covered.
The Consumers Federation of Kenya (COFEK) also opposed the increase of levy on fuel products terming it as not being in line with the Constitution.
COFEK Secretary General Stephen Mutoro said the proposal to add VAT on fuel is driven by the IMF and not the Kenyan Government.
“It does not meet the threshold of Article 10 of the Constitution. If allowed, the move will put the taxation levels on a liter of petrol to a staggering 70 percent,” Mutoro said.
He further pleaded with the government to put on hold the proposal and allow further stakeholders consultations.
On Thursday it was revealed that motorists in Nairobi will pay a record Sh130.15 per litre of petrol or about Sh17.9 more beginning September when petroleum products start attracting 16 per cent value added tax (VAT).
Treasury principal secretary Kamau Thugge confirmed that petroleum products will start attracting the tax on September 1 in line with Kenya’s promise to the International Monetary Fund (IMF) two years ago.
At prevailing prices, diesel, used to power commercial vehicles such as buses and tractors, will cost Sh16.5 more to stand at Sh119.77 a litre after adding the tax.
The new tax burden will also be felt among consumers of kerosene, who are mostly low-income households that use it for lighting and powering cooking stoves. A litre of kerosene will cost Sh99.44, a Sh13.7 increase from current price of Sh85 per litre.