Bernard Namunane
27 April 2011
Nairobi — Taxes on kerosene, maize and wheat have been removed in further measures to fight the rising cost of living in Kenya.
This is expected to bring down the price of maize flour, a staple for many families, as well as the price of bread and kerosene.
The government also waived secondary school fees in drought-hit areas as President Kibaki and Prime Minister Raila Odinga, who held a long meeting on Tuesday, moved to assure the public that they were working to curb the rising cost of living.
“The government is seized with this matter and it has the capacity to deal with it,” Mr Odinga said when he announced the steps being taken to control prices.
In his statement to Parliament, Mr Odinga said that there had been extensive consultations with the President and the ministries concerned before the decisions were reached.
He admitted that the effects of the rise in the prices of fuel were becoming unbearable, especially for the poorest and the worst hit by drought.
“Our people are adversely affected by these high prices. The government will implement a strong package of measures to cushion the poor and vulnerable.
“Such measures are both short-term and long-term. The government will find solutions that are sustainable,” he said.
“For immediate relief, the government has removed all taxes and levies on kerosene to reduce the cost of light and cooking energy,” he told MPs, who seemed not satisfied with the measures that the government was prescribing.
The PM said the measures come into effect next week and will further reduce the price of Kerosene by Sh5.66 a litre.
And since Treasury announced a reduction of Sh2 per lire of kerosene last week, it means the total reduction is Sh7.66.
This means that the pump price of kerosene, which had risen to Sh90.91, will come down to Sh83.25 a litre.
Pushed by MPs Chris Okemo (Nambale) and Peter Mwathi (Limuru) on when the new prices will be effected, Mr Odinga said they take effect immediately.
“The measures are supposed to be implemented immediately. From next week, Kenyans will start feeling the effect of the measures ” he said as he urged MPs to quickly pass legislation to bring them into force.
“Appropriate legislation will be introduced in this House as soon as possible to give effect to these measure. I expect that this House will act with utmost urgency, so that Kenyans receive this much needed relief very soon,” he said.
Mr Odinga, in what appeared to be a response to arguments by the oil industry that higher government taxes were behind the recent rise in the price of fuel, said the government had not increased levies on petroleum products since 2000, except the Road Maintenance Levy, which rose by Sh3 a litre in 2007.
“The rates of current taxes and levies on petroleum products have remained constant since the year 2000.
“In addition, the Government reduced the profit margin on regulated products such as kerosene, diesel and petrol from Sh6 a litre to Sh4/ a litre,” he said.
Import duty on maize and wheat brought into the country by private millers has been removed.
However, he said that the removal of import duty will not affect local farmers since international prices for maize and wheat were still high.
“Even if imported maize and wheat lands here, it will still be more expensive than local maize and wheat. Our main concern is the plight of consumers if the prices go up,” he said.
However, the price of a 2kg packet of maize flour, now at Sh95, is likely to come down given the availability of more maize and the reduction in the cost of diesel.
Mr Odinga said the National Cereals and Produce Board has been directed to provide storage facilities for the cereals that will be brought in by private millers.
The government will not be involved in importation of wheat and maize. The country has 23 million bags of maize, of which only 3 million is in the stores of the NCPB.
“Together with the available stock of maize, private import will make sure that there will be adequate supply of maize throughout the year,” he said.
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