Double blow to motorists as Epra ignores levy cuts

Kenyans are overpaying for fuel after the Energy and Petroleum Regulatory Authority (Epra) failed to make changes to Dabatain, as mandated by the Finance Act 2023, in its latest pump price review.

Epra, in its rush to revise fuel prices to reflect new taxes, has kept import declaration fees (IDF) and rail development fees (RDL) at previous rates, while Kenyans have paid illegal fees.

is reading: Ibra sets June to release a review of the oil business plan

The Finance Act 2023 amended the Miscellaneous Fees and Levies Act 2016 to cut the IDF from 3.5 per cent to 2.5 per cent and the RDL from 2.0 per cent to 1.5 per cent in what the country called offsets to help protect Kenyans from an expected hike in fuel prices after the doubling. Value Added Tax (VAT) from 8.0% to 16% effective July 1.

The omission by Epra means that Kenyans have taken a bigger hit than they should have taken from the most recent pump price revision which saw Epra revise prices for super petrol, diesel and kerosene upwards by Sh13.49, Sh12.29 and Sh11.96, respectively.

a The daily business An analysis of price breakdowns released by Epra on Friday shows the market regulator is charging motorists IDF fees of Sh3.40, Sh3.33 and Sh3.32 per liter for super-petrol, diesel and kerosene, respectively, unchanged from the amount set during the June 14 price review.

Likewise, the market regulator left the RDL unchanged at Sh1.94, Sh1.90 and Sh1.89 per liter of super petrol, diesel and kerosene, respectively.

Epra has not officially reported why it is selectively applying the changes in the 2023 Finance Act, but sources familiar with the matter suggest that this is because the price change that applied on June 30 applied to inventory that arrived in the country based on the June 14 review cycle.

RDL and IDF are taxes, not taxes. It is imposed based on the customs value of the goods imported into the country at a particular time. Therefore, we are dealing with inventory that has already arrived in the country and the two are determined based on the customs value. In the next review, Kenyans should expect to start seeing the impact of the reduction in the IDF and RDL,” said a person familiar with the matter.

The Kenyan Kwanzaa government is counting on the reduction in the RDL and IDF to help tame the increase in inflation expected after the doubling of the VAT on petroleum products.

In the latest revision, pump prices will be the highest on Mandera with a liter of premium petrol, diesel and kerosene now getting Sh209.53, Sh193.67 and Sh187.44 respectively.

Prices will be lowest in Mombasa where super petrol, diesel and kerosene will cost Sh192.48, Sh176.63 and Sh170.40 respectively.

The failure to reduce the RDL and IDF as stipulated in the Finance Act undermines the government’s plan to offset the burden caused by the standard classification of VAT on petroleum products.

Inflation closed June 2023 at 7.9 percent, slightly lower than it closed in May.

“We have looked at all of these factors in terms of where we expect inflation to be and we believe that on the issue of VAT on petroleum products there are obviously also balancing factors. The import declaration fee has been reduced from 3.5 percent to 2.5 percent. Similarly, the import declaration fee has been reduced Also reducing the railway development fee from 2 percent to 1.5 percent Central Bank of Kenya Governor Kamau Thug told reporters at his first briefing to the Monetary Policy Committee on June 27:

The Kenyan Kwanzaa government aims to collect Sh50 billion in additional tax revenue through the revision of the value-added tax on petroleum products.

is reading: Eyes on cheaper LPG as 13 companies bid for the Epra nod

This is even as preliminary data from the Treasury shows that collections from the RDL are expected to drop by Sh3.6 billion to Sh33.3 ​​billion in 2023/24, and from the IDF are expected to drop by Sh1.3 billion to Sh52.6 billion. in the fiscal year ending. June 2024.

→ (email protected)