Nairobi Star (Nairobi)
Francis Mureithi And Lola Okulo
29 April 2011
The government yesterday announced the scrapping of all taxes on kerosene and declared it will increase the minimum wage on Labour Day.
Prime Minister Raila Odinga said the government had removed the Sh5.66 tax levied on each litre of kerosene as a way of cushioning Kenyans against the increasing fuel and food prices. This is in addition to the Sh2 price cut announced by Finance minister Uhuru Kenyatta last week.
This brings to Sh7.66 the tax cut on a litre of kerosene which has been retailing at between Sh90 and Sh93 this month compared to Sh87 last month. The tax cut on kerosene and diesel by Uhuru last week did not stop civil society and consumer interest groups from staging public demonstrations in Nairobi and Mombasa to protest against the rising fuel and food prices.
Yesterday Raila announced the government had scrapped the import duty on wheat and maize. Raila said though the government will not import wheat and maize, private millers are free to import duty-free as a way of bringing down the cost of food.
The price of the two-kilo packet of maize flour has increased from Sh80 last month to the current retail average of Sh95. The two-kilo packet of wheat flour has risen from Sh90 to Sh130. The 90-kg bag of maize now costs Sh2,500 and wheat Sh3,800 due to a shortage in supply by the local farmers.
Raila said the National Cereals and Produce Board has been directed to provide its storage facilities for use by private millers who import wheat or maize.
He cautioned Kenyans not to expect an immediate drop in food and fuel prices as Parliament must first approve the new policy. “The memorandum is before the Cabinet. It will be approved during he next sitting of the Cabinet and it will come to the House for discussion. I expect that this House will act with utmost urgency so that Kenyans can start receiving this much needed relief very soon,” said Raila.
Raila said the government will on May 1 announce an increase in the minimum wage which Cotu, the umbrella trade union organisation, has been demanding.
Cotu had threatened to call a nationwide strike should the government fail to raise the minimum wage by 60 per cent and had warned it would launch the strike on May 1 should the government refuse their demands.
The Federation of Kenya Employers has been resisting the union’s demands saying they could not support a higher minimum wage due to the economic constraints.
The announcement of an increased minimum wage will be in keeping with the tradition set by previous administrations which have used the Labour Day for that. “The Government has agreed to further increase the minimum wage, to be announced on Labour Day. Such increment should have come after two years, but we will do it now to address the sharp rise in the cost of living,” Raila said during the Prime Minister’s question hour held every Wednesday.
The PM said rates of current taxes and levies on petroleum products had remained constant since 2000, with the exception of the Road Maintenance Levy which was raised by Sh3 per litre in 2007. Raila said the government reduced the profit margin on regulated products such as Kerosene, Diesel and Petrol from Sh 6 per litre to Sh 4.
Raila said the international price of crude oil has been rising due to high economic growth in China, India and Brazil, as well as the current turmoil in North Africa and the Middle-East. He told Parliament that prices has risen from US$73.0 per barrel in July 2010 to US$ 115.1 per barrel in April 2011.
Government statistics show inflation increased from 6.54 per cent in February to 9.19 per cent in March. Raila said given the high international prices, duty-free import of maize and wheat will not adversely affect local farmers.
He said through the imports, together with the available stocks of maize, the private import will ensure there is adequate supply of maize throughout the year.
He said the ministry of Agriculture estimates that 23 million bags of maize currently exist in stock which includes 3 million bags held at the NCPB. Food prices have been rising across the globe, driven in part by the higher transport costs that accompany rising oil prices.
The World Bank said last week that food prices are 36 percent higher today than a year ago, and are pushing people “deeper into poverty.”
Africa has been hit hardest by rising food costs over the last three months with wheat costing 87 percent more in Sudan; Rice is up 30 percent in Chad while maize prices have risen at least 25 percent in Uganda, Somalia, Mozambique and Kenya.
Protests against the rising food prices have been held in Kenya as well as in Uganda where that country’s top opposition politician Kizza Besigye was yesterday ordered not to walk for seven months or pay a fine of Sh2.2 million (UGSh60million) for leading the walk-to-work marches to protest higher food and fuel prices.
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