The government has unveiled a new plan to scrap all taxes on cooking gas and cylinders amid billions of shillings investment in the sector in the latest effort to accelerate Kenya’s transition to clean energy, the Business Daily has reported.
According to the newspaper, in the cabinet meeting last week thursday, the increase in the price of cooking gas was one of the issues that was discussed and the solution was mentioned as the cancellation of all taxes on those products.
“The following has been suggested; the removal of the tax on cylinders manufactured in the country, on liquefied petroleum gas (LPG) products as well as the cost of cylinder repair,” said the message of the Council of Ministers on tuesday evening.
The only tax levied on LPG is the Petroleum Development Fund Tax at the rate of Sh0.40 per kilo while LPG cylinders attract six taxes, including Value Added Tax (VAT) at the rate of 8.0 percent, Import Declaration Fee of 3.5 percent and Railway Development Levy (RDL) at the rate of 2.0 percent of the cost, insurance and freight (CIF) value.
The proposal comes a few days after the retail price of cooking gas rose by at least Sh260 for a 13 kg cylinder to Sh3,160 from Sh2,900 in July.
The cost of the six-kilogram jar has also increased to Sh1,380 from Sh1,200 in city centres.
This sector has attracted more and more investors, the latest of which is Gesi Taifa, owned by Tanzanian billionaire Rostam Aziz.
The removal of the tax began during the Mwai Kibaki era when LPG was tax-free, helping to keep the price at an average of Sh1,600 per 13kg container in 2007.
The Finance Act 2023 which came into effect from July exempted cooking gas from VAT of 8.0 percent, IDF of 3.5 percent and RDL of 2.0 percent.
The price of cooking gas had dropped by Sh430 for a 13 kg container and Sh150 for a six kg cylinder in July following the reduction in duty.