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The Kenya Association of Manufacturers (KAM) Thursday opposed further levy on the country’s petroleum products, saying such a move would immensely affect production lives of manufactures.
KAM’s Head of policy and Research Job Wanjohi said the planned implementation of the proposed 16 percent Value Added Tax (VAT) on petroleum products, would push manufacturers into seeking “cost-benefit analysis” without hurting consumers by passing on the costs in the vent that the directive comes to force on September 1.
“This will definitely push standard of living for Kenyans who are already straining. As KAM we see the impact affecting production lives of manufacturers in three areas namely. For those using generators during blackout will be affected since the generators use diesel which will now retail from Sh102 presently to about Sh120 a litre if the proposal sees light of the day,” says Mr. Wanjohi.
Wanjohi further says that, “this will also affect logistics, those transporting raw goods and materials as well as power bills due to fuel cost levy component which will attract the 16 per cent vat unless we stop using thermal electricity.”
The 16 per cent Value Added Tax (VAT) on fuel products including petrol, diesel, kerosene and jet fuel was introduced in the VAT Act of 2013, with a three-year grace period that would have seen VAT slapped on such products come into force in September 2016.
However, the government following clamor from stakeholders in the petroleum sector, extended that immunity for a further two years beginning September 1, 2016. The two-year allowance period which is now set to elapse beginning September 2, 2018, could see such products become taxable at the standard rate of 16 per cent.