Transport could be paralysed Wednesday morning after the Kenyan Motorists Association asked Kenyans to park their vehicles on major roads to protest an impending increase in fuel prices.
Having deferred it for two years, Treasury is planning to implement a 16 per cent Value Added Tax (VAT) on petroleum products from September 1. The new tax will increase fuel prices by up to Sh17 per litre.
In the new plan, petrol prices will shoot to more than Sh131.93 in Nairobi, while diesel and kerosene will shoot from the current Sh102.74, and Sh84.95 per litre, to highs of Sh119.38, and Sh98.54, respectively.
HUGE PRICE CHANGE
“The fuel prices are already too high and the 16 per cent is unnecessary. ERC have been increasing prices every month since the election. Whenever the government wants to raise money, fuel becomes their easier target,” Kenya Motorists Association chairman Peter Murima said.
Mr Murima asked motorists sympathetic to their course to dump their vehicles on the road between 7.30am and 10.30am.
The implementation of the VAT on petroleum products are part of the September 2013 reforms proposed by the International Monetary Fund (IMF), and which was suspended for three years. It was extended by another two years in 2016, and now, Treasury has vowed that the new tax must take effect this September—after a five-year relief.
The Kenya Private Sector Alliance (Kepsa) has already warned that the planned huge price change will increase inflation by as high as four per cent.
Being the main input in the energy-intensive sectors, Kepsa said, the projected rise in pump prices will result in an increase in the cost of production and manufacturing of commodities by both small and big businesses, an increase in cost of transport and an increase in cost of household consumption of goods and services.
This will also have a great impact on production and service sectors. The country will not attain the anticipated two-digit GDP growth, generate jobs and create wealth,” Kepsa chief executive Carole Kariuki said in a statement on Monday.
The increase in fuel prices will join an already growing list of taxes that Kepsa warned could hit investments and lead to loss of jobs.