NAIROBI, Kenya, May 21-Parliament has commenced review of legislative proposals by Kiharu MP Ndindi Nyoro seeking sweeping reductions in fuel taxes and levies, in a move that could reshape the country’s fuel pricing structure and ease pressure on the cost of living.
The Parliamentary Budget Office confirmed receipt of Nyoro’s notice proposing amendments aimed at lowering the retail prices of super petrol, diesel and kerosene through cuts to the Road Maintenance Levy Fund (RMLF) and the removal of VAT on petroleum products.
In its response dated May 19, Parliament said the proposals will be processed under Article 114 of the Constitution and forwarded to the relevant committees for detailed scrutiny, including the Budget and Appropriations Committee and the Departmental Committee on Finance and National Planning.
Nyoro’s plan seeks to reduce the RMLF by Sh7 per litre, effectively lowering it from Sh25 to Sh18 by reversing the 2024 increment.
He is also pushing for an amendment to the VAT Act to exempt petroleum products entirely, reducing VAT from 8 percent to zero.
If implemented, the proposals could significantly lower pump prices across all fuel categories, with Nyoro estimating diesel prices could fall by as much as Sh54 per litre.
“These amendments are short-term measures aimed at reducing the inflationary and sticky economic effects arising from the current high fuel prices,” Nyoro said in his submission to Parliament.
“Our intention is to reduce VAT by 8 percent and make the products VAT exempt, reduce the Sh7 fuel levy added in 2024, reduce profit margins of importers and distributors, and provide an additional subsidy of Sh5 billion for petroleum.”
The proposals now enter a politically sensitive phase where MPs will weigh consumer relief against potential revenue losses to the exchequer, particularly funding tied to road maintenance and infrastructure development.
The Parliamentary Budget Office has further indicated that Nyoro will be required to justify the fiscal implications of the changes against the approved 2025/26 budget and the upcoming 2026/27 estimates, as well as existing financial commitments linked to fuel levies.
Economists have previously warned that while fuel tax reductions may offer immediate relief to households and businesses, they could widen the fiscal deficit if not matched with alternative revenue sources or expenditure adjustments.
