Kenyan Parliament Approves 16% VAT On Petrol

The Kenyan Parliament on Wednesday approved a proposal to impose a 16% value-added tax (VAT) on petrol. The vote was largely along party lines, with Kenya Kwanza MPs supporting the measure and Azimio MPs opposing it.

The VAT hike is expected to increase the price of petrol by Sh13.20 per liter, bringing the cost to Sh196 per liter. This is a significant increase from the current price of Sh182.80 per liter.

The VAT hike has been met with criticism from both the public and opposition politicians. Some critics have argued that the hike will disproportionately impact the poor and vulnerable, while others have accused the government of breaking its campaign promises.

However, the government has defended the VAT hike, arguing that it is necessary to raise revenue to fund essential services. The government has also said that the VAT hike will be offset by a reduction in other taxes, such as the excise duty on petrol.

The VAT hike is set to take effect on July 1, 2023.

Analysis

The VAT hike is a significant policy change that is likely to have a major impact on Kenyans. The hike is likely to increase the cost of living for many people, and it could also lead to inflation. The hike is also likely to be unpopular with voters, and it could damage the government’s popularity.

The government has defended the VAT hike, arguing that it is necessary to raise revenue to fund essential services. However, the government has not provided any details about how the revenue from the VAT hike will be used.

The VAT hike is a controversial policy change, and it is likely to be debated for some time. It remains to be seen whether the government will be able to implement the VAT hike without facing significant opposition.