Epra ignores levy cuts

Kenyans have been forced to pay the revised charges as a result of Epra’s hasty decision to hold the Import Declaration Fee and Railway Development Levy at the previous rates.
In order to protect Kenyans from the anticipated fuel price increase following the doubling of Value Added Tax from 8.0% to 16% on July 1, the Finance Act of 2023 amended the Miscellaneous Fees and Levies Act of 2016 to reduce IDF from 3.5% to 2.5% and RDL from 2.0% to 1.5%. The state referred to these reductions as offsets.
Kenyans have suffered more than they should have from the most recent pump pricing review, in which Epra increased the prices of super gasoline, diesel, and kerosene by Ksh13.49, Ksh12.29, and Ksh11.96, respectively.
The market regulator is charging drivers an IDF of Ksh3.40, Ksh3.33, and Ksh3.32 per litre of super petrol, diesel, and kerosene, respectively, unchanged from the amount set at the June 14 pricing review, according to analysis of the price breakdown given by Epra on Friday.
Similar to this, the market regulator maintained RDL at Ksh1.94 for super gasoline, Ksh1.90 for diesel, and Ksh1.89 for kerosene, respectively.
Epra hasn’t formally explained why it only applied some of the Finance Act 2023 modifications, but people with knowledge of the situation say that it did so because the June 30 price change only applies to stock that entered the nation based on the June 14 review cycle.
“Levies, not taxes, are RDL and IDF. They are assessed depending on the customs value of the products that are being brought into the nation at a certain moment. We are therefore dealing with inventory that has already entered the nation, and the two were chosen based on the customs value. Kenyans should anticipate beginning to notice the effects of the drop in IDF and RDL in the following review,” according to a source familiar with the situation.
The Kenya Kwanza government is counting on the drop in RDL and IDF to assist contain the rise in inflation anticipated in the wake of the VAT on petroleum products being doubled.
According to the most recent assessment, Mandera will have the highest pump prices, where a litre of super gasoline, diesel, and kerosene will now cost, respectively, Ksh209.53, Ksh193.67, and Ksh187.44.
The cheapest prices will be in Mombasa, where super gasoline, diesel, and kerosene would each cost Ksh192.48, Ksh176.63, and Ksh170.40.
The government’s strategy to lessen the burden caused by the standard rating of VAT on petroleum goods is undermined if RDL and IDF are not reduced as specified in the Finance Act.
At the end of June 2023, inflation was 7.9%, just little less than when it ended May.
“We have examined all of these elements in light of where we anticipate inflation to be, and we do believe that there are compensating considerations with regard to the VAT on petroleum items. From 3.5% to 2.5%, the import declaration fee has been decreased. The Railway Development Levy has also been decreased from 2% to 1.5% in a similar manner. Therefore, this will lessen any effects that the VAT on petrol may have, but we do anticipate some increase, said Central Bank of Kenya Governor Kamau Thugge in his first monetary policy committee press conference on June 27.
The modification of the VAT on petroleum goods is intended to raise an additional Ksh50 billion in tax income for the Kenya Kwanza administration.
This is despite the fact that according to early Treasury data, RDL’s revenues are expected to drop by Ksh3.6 billion to Ksh33.3 billion in 2023–24 and IDF’s by Ksh1.3 billion to Ksh52.6 billion in the fiscal year that ends in June 2024.