This archive report was first published on 3 July 2020.
On July 1, 2021, the Kenya Revenue Authority had announced plans to scrap liquefied petroleum gas (LPG) from the list of zero-rated items, citing the Finance Act 2020. However, Parliament intervened, pushing back the implementation of the 14% value-added tax (VAT) on LPG until next June.
According to the Finance Act 2020, the Treasury Secretary, Ukur Yatani, had sought to remove LPG from the list of tax-exempt goods. This move would have seen Kenyans incur an extra Sh300 to buy the 13-kilogramme cooking gas, which currently retails at between Sh2,100 and Sh2,200.
As it stands, Kenyans have been enjoying low cooking gas prices since June 2016, when the Treasury scrapped the tax on LPG to cut costs and boost uptake among the poor. The implementation of the 14% VAT next year would increase LPG prices at a time they were anticipated to fall due to the plunge in global prices of crude oil in the wake of the coronavirus pandemic and high production.
Despite the Treasury's efforts to control prices, the LPG market is not regulated, leaving room for dealers to exploit market forces to their advantage. This fuels fears that prices could rise even further, despite international crude prices continuing to fall.
