MP Suggests Tax Reductions to Address High Fuel Costs

Kenyan drivers are confronting unprecedented fuel prices in the most recent pricing period, with growing demands on authorities to implement more decisive actions to reduce the burden on households.
Starting May 15, 2026, the Energy and Petroleum Regulatory Authority (EPRA) declared substantial increases in fuel costs. Super Petrol increased by KSh 16.65 to KSh 214.25 per litre, while diesel jumped by KSh 46.29, setting a new high of KSh 242.92 per litre in Nairobi. Kerosene prices stayed constant at KSh 152.78.
These latest increases come during a challenging time for Kenyan fuel consumers, marked by fluctuating international oil markets and a complicated local tax system.
Suggested Measures and Current Government Response
VAT Reduction: Calls for complete exemption of fuel products from Value Added Tax (VAT) or a substantial decrease in the tax rate.
Levy Elimination: Removal of the KSh 7 road maintenance charge implemented in 2024.
Increased Subsidies: Allocation of an extra KSh 5 billion from the Fuel Stabilisation Fund to support consumers.
Although the government has taken some stepsincluding a temporary reduction of VAT on petroleum products from 16% to 8% in mid-April 2026 and the release of KSh 5 billion from the Petroleum Development Levy Fund for the current periodcritics such as Nyoro contend that these actions are “grossly insufficient” given the current economic challenges.
At the heart of the continuing discussion is the Government-to-Government (G2G) fuel importation program, established in 2023 to stabilize the shilling and guarantee fuel availability.
While authorities assert that the G2G agreement has been crucial in maintaining consistent fuel supplies and avoiding the shortages experienced in 2022, it has come under serious criticism. Detractors describe it as a “fraudulent scheme” that favors a select few, highlighting issues with transparency and the elevated fuel prices despite lower global oil prices compared to 2022. Government representatives, however, have characterized the framework as an essential mechanism that has effectively protected Kenya from more severe price fluctuations and currency instability.
The escalating fuel expenses are spreading throughout the economy. As transportation costs and inflation face substantial pressure, the International Monetary Fund (IMF) has lowered Kenya’s 2026 growth projection, indicating that fuel import expenses represent a major threat to the nation’s economic security.
With the new rates effective until June 14, 2026, both businesses and individuals are preparing for ongoing financial pressure, with decision-makers under increasing pressure to establish a reasonable equilibrium between fiscal prudence and consumer support.