The government is considering additional measures to cushion Kenyans from high fuel prices, including extending the reduced 8 per cent VAT on petroleum products beyond October and introducing further subsidies.

🇰🇪 Breaking It Down

Treasury Cabinet Secretary John Mbadi said the government was exploring funding options for fuel subsidies as it monitors the impact of the ongoing conflict in the Middle East on global oil prices.

Mbadi spoke on Tuesday, August 11, during a media briefing at the Treasury Building, just three days before the Energy and Petroleum Regulatory Authority (EPRA) is expected to announce new fuel prices for the August-September pricing cycle.

As the October expiry of the 8 per cent VAT relief approaches, Mbadi said Treasury was weighing whether to extend the tax cut, with the decision largely dependent on how the unpredictable Middle East crisis unfolds.

📌 What You Need to Know

“You know the situation in the Middle East is quite unpredictable, and I do not want to talk about it with authority. We will monitor the situation as it unfolds,” Mbadi said.

The CS said Treasury was weighing the need to raise tax revenue against the risk of higher fuel prices worsening inflation and creating greater economic pressure on households and businesses.

At the same time, Mbadi also disclosed that Treasury was looking for additional sources of funding that could be used to subsidise fuel prices if the situation deteriorates.

“As much as we are looking for tax revenue in terms of VAT, we must understand that if it is causing inflation, then it is going to have more harm on the economy. So we are balancing the two,” he said.

The latest consideration comes after the government extended the 8 per cent VAT on petroleum products for three months in July, with the tax relief initially introduced as part of measures to cushion consumers from the impact of the Middle East conflict and rising global oil prices.

Energy and Petroleum Cabinet Secretary Opiyo Wandayi also announced a Ksh945 million subsidy from the Petroleum Development Levy for the July-August pricing cycle, saying the funds would be used to maintain prevailing pump prices.

📰 Source: Kenyans.co.ke