IMF Kenya Tax Demands: High taxes are cited as one of the reasons why fuel prices in Kenya are exorbitant. Now, Kenyans might have to dig even deeper to buy fuel following tax demands from the International Monetary Fund. According to a report that appeared in a local daily, the IMF is demanding that Kenya raises value added tax (VAT) on all petroleum products from the current 8 per cent to 16 per cent.
“If needed to meet fiscal objectives, capitalise on lower fuel prices by aligning fuel VAT to the standard rate. Oversupply and volatility in the oil market would be a positive shock for Kenya, easing potential external balance pressures from other sources,” the IMF said.
This is one of the conditions that the IMF has set against a Sh. 257 billion that Kenya is set to receive from the international body. This loan has left a bitter taste in the mouths of Kenyans, with many staging online protests against the IMF over the weekend.
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Currently, fuel prices in Kenya are dominated by up to seven levies. These include taxes and levies, excise duty, road maintenance levy, VAT, railway development levy, merchant shipping levy, import declaration levy, anti-adulteration levy, and petroleum development levy.
Taxes and levies account for Sh. 57.33 for every litre of super petrol, and Sh. 45.47 and Sh. 39.55 per litre of diesel and kerosene respectively. Excise duty accounts for the biggest chunk of the taxes and levies at Sh. 21.95 per litre in the latest prices followed by road maintenance levy (Sh. 18), VAT (Sh. 9.10) and the petroleum development levy (Sh. 5.40).
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The cost of petrol per litre is currently going at Sh. 123 while diesel is retailing at Sh. 108 per litre. The government has already warned Kenyans to expect higher fuel prices in the upcoming review.