Rethink VAT levy on cooking gas
Kenyan households will find themselves between a rock and a hard place after the government announced it would implement the Finance Bill 2020, after it was delayed for one year to July, on fears of surging cost of living.
Since June 2016, gas dealers and manufacturers have been selling cooking gas at zero-rated costs after the government scrapped VAT, however, Kenya Revenue Authority (KRA) wants to start imposing the levy at the onset of the new financial year.
While the State would like to raise taxes, and pivot the struggling economy, which is highly indebted amid increasing fiscal deficit and surging debt levels, the timing of this one is not right at all.
With Covid-19 still ravaging Kenyans, it is not right to pile more pressure on struggling Kenyans, knowing well that most of whom are unemployed due to pandemic instigated lockdowns.
While other nations are pushing for safety nets to cushion the poorest among them, for the government to re-introduce this tax at this point will be counterproductive.
It must be remembered that there was a stimulus package to help Kenyans last year, with various taxes being suspended.
Furthermore, official data from the 2019 census shows 53 per cent of homes in urban centres rely on LPG for cooking compared to 5.6 per cent of rural households, to make cooking gas expensive will not only hit the poor, but destroy gains made in environmental degradation.
LPG was slowly becoming the preferred energy source for households in major towns and homes due to its convenience and because it is cleaner than other alternatives including charcoal and kerosene.
Now that even the price of kerosene has gone up to avoid traders from using it to adulterate diesel, demand for charcoal and firewood in Kenya is set to increase, while its tree cover continues to dwindle.
More importantly, the government should listen to the pain of the common man and avoid stocking their pain as witnessed with the recent announcement of the cost of fuel and pivot pricing pressure across the economy.
Although the government is under immense pressure to collect more revenue, some of the proposals were already rejected when debating the Tax Laws (Amendment) Bill, 2020.
It is about time these policy makers come up with more innovative ways of collecting revenue during bad times, especially in a pandemic.
