The National Assembly has voted to keep value-added tax on petrol, diesel and kerosene at eight per cent for another 90 days, a move that will deepen the revenue the State has already given up to hold down pump prices.
MPs passed the Tax Laws (Amendment) Bill, 2026, on October 14, the day the earlier relief was due to lapse. Without it, VAT would have returned to the standard 16 per cent. The Bill is to take effect retrospectively from that date and now awaits presidential assent.
What the State is forgoing
The government has been losing about Sh9 billion a month since April 14, 2026, when it cut VAT on petroleum products from 16 per cent to eight per cent. The Daily Nation puts the six-month total at about Sh54 billion. Adding the new three-month window would take the forgone revenue to roughly Sh81 billion.
Finance and National Planning Committee chair Kimani Kuria told the House that the Middle East conflict continues to push global oil prices and that extending the reduced rate was needed to shield Kenyans from higher transport and production costs. Majority Leader Kimani Ichung’wah, who sponsored the Bill, said MPs also wanted the National Treasury Cabinet Secretary able to extend the rate for a further 90 days by gazette notice if the conflict drags on.
Prices still rose
The relief did not stop this month’s EPRA review. From October 15 to November 14, Super Petrol in Nairobi rose by Sh12.93 to Sh226.96 a litre, diesel by Sh9.90 to Sh227.76, and kerosene by Sh28.49 to Sh219.87, KBC reported. Nairobi Law Monthly cited Majority Leader Ichung’wah saying that without the eight per cent rate, Super Petrol in Nairobi would have cost about Sh17 more than the EPRA figure.
Mwea MP Mary Maingi backed the Bill, saying fuel costs feed into matatu fares and food prices. Suba North MP Caroli Omondi supported the cut but urged a return to the open tender system for fuel imports.
The extension sits uneasily with Kenya’s fiscal squeeze. Public debt stands at Sh12.8 trillion, the Nation noted, and the IMF has pressed for stronger domestic revenue, including from petroleum. Keeping the lower rate leaves less cash for the budget unless Treasury borrows or cuts elsewhere.
