The state should revise its approach to protect Kenyans from the rising cost of energy in the country.
Our position is that the fuel subsidy program is not sustainable and can only be used as a temporary measure.
Now the government has admitted that paying the oil majors to keep fuel prices low consumes significant resources.
Cabinet Secretary for Energy Monica Juma said the government would end the fuel subsidy scheme, pointing to high petrol prices and a further rise in the cost of basic goods and services in the coming months. come.
Dr Juma said on Thursday that the surge in global crude prices above $100 a barrel has put a strain on the fuel stabilization fund due to the large increase in compensation for oil majors to keep prices at the pump low.
The escalating cost of global crude following Russia’s invasion of Ukraine will have serious repercussions on the local economy if the government does not find a lasting solution.
Inflation already hit a 27-month high in May as prices soared for essentials like cooking oil, food, fuel and soap, which squeezed household budgets and demand. of goods and services.
We always maintain that the government can suspend certain taxes to reduce the cost of energy, especially now that the Kenya Revenue Authority (KRA) exceeds its annual targets.
KRA plans to exceed its initial revenue collection target for the current fiscal year by up to 140 billion shillings, thanks to improved consumption and income tax collection as the economy continues to recover post Covid.
The tax authorities collect 62.89 shillings from every liter of petrol, a 39% increase in tax revenue over the past two years, which has made the Kenya Revenue Authority a key beneficiary of soaring prices at the pump. But at what price for the consumer?
Some fuel taxes should be removed to cushion Kenyans who are already feeling the pinch of high prices.