Petrol, kerosene prices to go up, cooking gas down

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Poor households using kerosene for cooking and lighting and motorists are among the big losers in the Sh2.26 trillion budget presented to Parliament on Wednesday by National Treasury CS Henry Rotich.

The proposed budget, which seeks to promote growth of industry, is 22.82 per cent larger than the Sh1.84 trillion budget for the year ending this month.

The proposed taxation measures are expected to help the Kenya Revenue Authority collect Sh1.38 trillion in 2016-17, a 16.10 per cent increase over this year’s projection of Sh1.18 trillion.

Rotich proposed reintroducing the excise duty on kerosene, which was scrapped in 2011, at a rate of Sh7,205 for every 1,000 litres, meaning Sh7.21 additional levy per litre. Kerosene users can blame unscrupulous traders who have been using the commodity to adulterate diesel.

“This has denied the oil marketers business in the neighbouring countries, in addition to giving them a bad reputation,” Rotich said in his speech. “In addition, adulteration negatively impacts car engines and increases their maintenance costs.”

The government is, however, seeking to encourage low-income families to switch to cleaner cooking gas. Duty on gas stoves and electric cookers has been slashed to 10 per cent from 25 per cent.

“This will give Kenyans access to clean, safe and efficient household energy, protect forest cover and reduce premature deaths,” Rotich said.

The CS also accepted a proposal by the Kenya Roads Authority to increase the road maintenance levy to Sh18 from Sh12 per litre of diesel and petrol to cater for increased need to maintain the expanding road network.

Other fuel consumers are, however, set for some relief after Rotich extended the introduction of the 16 per cent VAT on petroleum products by one year from the initial target of September 2016, based on a three-year transition period.

To bridge the gaping housing supply gap of more than 150,000 units in urban areas, the CS proposed cutting corporate tax for developers building at least 1,000 affordable houses a year to 20 per cent from 30 per cent.

Rotich said he will be gazetting rules to implement the simplified 10 per cent tax on gross rental income for landlords earning less than Sh10 million. The regulations empower the Commissioner of Income Tax to appoint withholding tax agents to collect taxes on a minimum of Sh12,000 monthly incomes.

Raw materials to make animal feed have also been exempted from the 16 per cent VAT, providing relief to livestock farmers after exemption of the levy on final products failed to result in lower prices.

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