Kenya Parliament has begun reviewing a proposed law aimed at reducing fuel costs, offering potential relief to households and businesses grappling with rising prices.
The Bill, which seeks to amend the Value Added Tax Act, was formally introduced in the National Assembly through its First Reading, marking the start of the legislative process.
If passed, the proposal sponsored by Majority Leader Kimani Ichungwah would lower VAT on petroleum products from 16% to 8% for a period of three months.
The legislation has now been referred to the Departmental Committee on Finance and Planning, which will review its provisions, gather stakeholder input and oversee public participation before presenting its recommendations to the House.
Rising fuel prices spark urgency
The move by lawmakers comes amid growing public frustration following a sharp increase in fuel prices announced by the Energy and Petroleum Regulatory Authority.
Recent adjustments saw petrol prices rise by KSh28.69 per litre, while diesel increased by KSh40.30 per litre. Following the review, a litre of Super Petrol now retails at KSh206.97, while diesel is priced at KSh206.84.
These increases have intensified the cost of living crisis, affecting transportation costs, food prices and business operations across the country.
The VAT amendment proposal follows a broader set of government interventions aimed at managing fuel price pressures linked to global market volatility.
President William Ruto recently announced measures designed to stabilize fuel prices and shield consumers from international price fluctuations. These include policy adjustments and targeted interventions within the energy sector.
However, analysts note that while short term tax cuts may provide immediate relief, long term solutions will require structural reforms in taxation, supply chains and energy diversification.
Economic observers also caution that reducing VAT could temporarily affect government revenue, potentially impacting public spending if not offset by other measures.
The Finance and Planning Committee is expected to conduct public hearings, allowing citizens, industry players and experts to submit their views on the proposed changes.
After completing its review, the committee will table a report in Parliament, paving the way for debate, possible amendments and eventual voting by lawmakers.
If approved, the Bill could offer temporary financial relief to millions of Kenyans struggling with high fuel costs, while also shaping ongoing discussions on taxation and economic policy.
