Cooking Gas Price To Hit Record High On Return of V.A.T

Cooking Gas Price: From July 1 this year, you will pay at least Ksh.350.00 more for cooking gas after the introduction of 16% value-added tax (V.A.T) on the commodity. This is according to an article published in the Business Daily Newspaper.

This will add more pain to families who are already having to cope with the high prices of electricity and fuel amid the COVID-19 pandemic.  

From the article, Kenya Revenue Authority said that it would impose the 16% tax at the start of the next financial year, a move that could push households to use alternative sources of energy amid depressed income.

According to KRA, this is in line with the Finance Act that reinstated the VAT on liquefied petroleum gas. This way to be implemented last year in July but was shelved due to concerns of the high cost of living.

Currently, a 6-Kg cooking gas cylinder which most households use retails for between Ksh. 650 and Ksh. 950.00. The 13-kilogram cooking gas retails at Sh2,250, meaning that it would now increase to Sh2,610 when the new tax measures come into force while the 6-Kg cylinder would go up to Ksh. 1200.00.

Already the government is struggling to keep the cost of living down and expensive cooking gas prices would only add another political headache. This comes barely weeks when the government was forced to have the price of fuel unchanged after public outcry, where half of the price of petroleum fuel goes into taxes.  

Over the past year, cooking gas prices have not changed much despite the volatility in the global crude oil market during the period when petrol prices oscillated between a low Ksh89.10 a liter in June last year to the current high of Ksh122.80.

Since then, households in the country have been enjoying low cooking gas prices after the Treasury scrapped the tax on LPG to cut costs and boost uptake among the poor who rely on dirty kerosene and charcoal for cooking.

According to an email sent to Business Daily, KRA said, “The effective date of the amendment is 1st July 2021. This means that the supply of liquefied petroleum gas will be subject to VAT at the standard rate of 16 percent from 1st July 2021.”

Cooking Gas Price Fell

Unlike other petroleum products such as petrol and diesel, Liquefied Petroleum Gas (LPG) is not controlled and is subject that market forces.

For example, the price of a 13-Kg cooking gas fell to below Ksh. 2000.00 after the treasury scrapped the 16% value-added tax.

In 2010, the energy regulator started controlling the prices of other petroleum products to cushion the consumers from irregular price hikes.

The rise in cooking gas prices is expected to pile pressure on households that are currently struggling to foot daily bills due to job losses and drastic cuts in earnings in the wake of COVID-19.

The Ksh. 350 on LPG prices will be the biggest jump in more than two decades and will see high commodity prices witnessed lastly in 2015.