Kiharu MP Ndindi Nyoro has unveiled a fresh proposal in Parliament seeking to lower fuel prices through a series of tax and levy reductions, in what could significantly ease the cost of living for Kenyan households and businesses.
Parliamentary Process Begins
Ndindi Nyoro confirmed that the parliamentary process has already begun following the submission of proposed amendments targeting taxes imposed on petroleum products. He said the proposals are expected to be discussed before relevant parliamentary committees next week.
Nyoro noted that while rising fuel prices have had a direct impact on the transport sector, the ripple effects are being felt across the wider economy through increased prices of goods and services.
VAT and Fuel Levy Targeted
Key among the proposals is the removal of the current 8% VAT on petroleum products by classifying fuel as a VAT-exempt item under the VAT Act.
The amendment seeks to delete Section 5 subsection 2A of the VAT Act Cap 476, effectively reducing VAT on fuel from 8% to zero.
Nyoro is also seeking to reverse part of the Road Maintenance Levy Fund (RMLF) increase introduced in 2024. Under the proposal, the levy would be reduced by KSh 7 per litre, bringing it down from the current KSh 25 to KSh 18 per litre.
In addition, the MP wants profit margins for fuel importers and distributors reviewed downward as part of broader efforts to stabilize retail fuel costs.
Proposed Subsidy and Price Impact
The proposals further include an additional KSh 5 billion subsidy allocation for the petroleum sector to cushion consumers against persistent global fuel price volatility.
According to Nyoro, the combined measures could reduce the price of diesel by approximately KSh 54 per litre if implemented.
The proposed amendments have been presented as short-term interventions aimed at easing inflationary pressure and addressing the broader economic strain caused by high energy costs.
Fuel prices remain a sensitive issue in Kenya due to their direct influence on transportation, food prices, manufacturing costs, and overall inflation.
Any reduction in pump prices is likely to have a wider economic impact, especially for households and businesses already grappling with high living expenses.
