EDITORIAL: Steep rise in petroleum prices a major misstep
Thursday, July 16, 2020 1:28
The move by the government to increase the Petroleum Development Levy that has led to the highest rise in pump prices in more than a decade is in bad faith, considering the current state of the economy and Kenyans’ pockets.
It is clear that the government has taken advantage of the opportunity offered by the low fuel prices in the last four months to put in the adjustment from Sh0.40 to Sh5.40 per litre.
Such a move would probably have raised much more furore had it been done during a time of higher prevailing oil prices.
However, it is the current state of the economy that makes the timing of the levy adjustment wrong.
Kenyans are struggling to survive due to the negative effects of the Covid-19 pandemic on the economy, with hundreds of thousands having lost their jobs or suffered pay cuts and businesses struggling to keep afloat as a result.
Only last week, the Treasury revealed that 70 percent of households are struggling to pay rent.
An increase in the price of fuel has a far reaching effect on other sectors of the economy and household budgets due to the knock-on effect on transport, which is transferred to the price of goods.
We can now expect the cost of food and other essential items to go up as transporters load the extra charges on traders. The hardest hit by this are likely to be the low-income earners, who traditionally spend the biggest part of their income on food.
We, therefore, feel this levy increase, which was quietly introduced via a gazette notice on July 10, could have been postponed until at least January to cushion suffering Kenyans from further economic hardship in an extraordinarily tough period.
The Treasury and Parliament have already taken similar measures to delay new taxes until next year in the case of the VAT on cooking gas and the adjustment for inflation of specific excise duty on a range of items.
Given that crude prices are still rising following their slump earlier in the year, the pain at the pump is likely to get worse.
It is not too late to shelve or postpone the implementation of the duty increase, which flies in the face of the government’s pledge to help Kenyans tide through the Covid-induced economic hardships.