Charging VAT on LPG is counterproductive!
CPA Umeme Steve
Internal Audit Manager | Head of Internal Audit | Compliance Manager | Risk Management Specialist | Board Member | Financial and Operations Auditor | CISA | CFIP | CPAK
Liquefied Petroleum Gas (LPG), otherwise called cooking gas, was zero-rated in 2016 to encourage its uptake among low-income households, and deter rural homes from reliance on firewood, kerosene and charcoal. However, the Finance Bill 2020 reintroduced VAT on LPG, but delayed the levy for one year to July 2021, amid concerns over high living costs.
Rollback...
This will thrust more people into suffering and roll back the environmental gains achieved over time. It could be counter-productive as the government tries to raise more money to fund its burgeoning budget.
When you increase the price of LPG, you make an already bad situation worse, in the sense that people cannot afford the gas and would push more households to go back to dirty fuels like kerosene and charcoal for cooking.
Corruption
There are less punitive ways of making money by the government, including dealing with corruption, but the government is staring at doubling the health budget by making gas expensive.
LPG is the preferred energy source for households in major urban centres because of its convenience. It is also cleaner than kerosene, firewood and charcoal, the alternative cooking fuel used in the country.
If accented to by Parliament, the move by KRA will have ramifications on Kenyans, especially the low income; most of whom lost their employment due to the Covid-19 pandemic.
At present, refilling a 13 kg LPG cylinder retails at Sh2,250, with the price bound to change to Sh2,610 with an additional 16 per cent VAT levy.
Motorists, especially from cub hailing companies who have repurposed their vehicles to use LPG instead of Super Petrol, to cut costs, will also be affected.
Counterproductive.
With the expected review, the Government will be hard-pressed to meet its 35 per cent adoption target of LPG as cooking fuel by 2030. The uptake which was envisioned back in 2016 has just been thrown out of the window. Talk of shooting self in the foot.
Internal Audit and Assurance Manager at ActionAid International
3 年Adoption of liquefied petroleum gas as a clean cooking solution is lagging behind Kenya’s 2030 development goal, despite several government initiatives taken along the LPG value chain. The government’s strategy has so far focused on reducing the cost of LPG and increasing its use among lower-income Kenyans. Which will be reversed by introduction of VAT. Sustainable uptake might be accelerated by taking vigorous regulatory steps to reduce the consumer price and minimize unlicensed LPG sales, reviewing the economics underpinning the intervention scheme. #VAT
Seasoned Finance Leader | Specialized in Strategic Financial Management, Cost Optimization, & ERP Solutions | Empowering Growth & Ensuring Compliance Across Diverse Sectors
3 年leave alone even pandemic, Kerosene price went up to discourage and create a safe way of household cooking, if they want more tax to plug in for budget deficit, we all know where the big coin goes into their pockets(recurring expenditure), the main problem in this country is we have government advisors/political advisors and kitchen cabinet all working for their personal interest, now someone want to value tax gas this government is just too much.
QA/QC Manager at Proto Energy
3 年Umeme Steve this point is proactive