By David Njugi
The national government recently proposed new tax incentives to cushion consumers and businesses due to the COVID 19 pandemic.
Governments all over the world, including the Kenyan government, have been obligated to choose between health and economy, forcing them to take drastic measures to save lives.
On March 25, 2020, President Uhuru Kenyatta announced various measures to help Kenyans cope with the ongoing coronavirus crisis.
One of the mitigations offered was the reduction of the VAT rate from 16 percent to 14 percent among others.
All the measures are expected to make the lives of Kenyans easy, however, in the draft Tax Laws (Amendment Bill), 2020, there are significant measures introduced that will have a negative impact on the general public.
The bill proposes to introduce VAT on previously exempted suppliers including LPG (liquefied petroleum gas), clean cooking stoves, raw materials for the manufacture of clean cookstoves, biogas digester and biogas among other essential goods.
The new measures are going to slow down the adoption of clean cooking solutions, increase the cost of products to the consumer, deter future investments in the sector and curtail the country in achieving its ambitious goal of universal access to modern clean cooking services to its citizens by 2028 ahead of the global target of 2030.
Kenya’s Sustainable Energy for All Action Agenda envisions that universal access to modern cooking solutions for all Kenyans will be achieved by 2030.
Statistics from the Kenya Cooking Sector Study (assessment of the supply and demand of cooking solutions at the household level- launched by the Ministry of Energy in collaboration in Clean Cooking Association of Kenya, (CCAK) show that 64.7% of households in Kenya still use wood as their primary cooking fuel, followed by LPG at 19% (2.4 million) and charcoal at 10%.
Further, 93.2% of the rural populations still rely on solid fuels as their primary fuel source.
Over the last two decades (1999-2018), the number of households using LPG has increased about six times from approximately 0.6 million to 3.7 million with the increase largely attributed to the VAT exemption.
The study also shows that more than 21,000 people die annually due to complications related to cooking with inefficient stoves and fuels like firewood and charcoal.
Cooking with polluting and inefficient fuels lead to illnesses like heart disease, lung cancer and asthma which can increase risks of severe COVID 19 cases. Clean cooking is key to a healthy population.
If the prices of clean cooking products such as biogas, ethanol, cookstoves and LPG prices increase, it is so unlikely that consumers will switch to the use of clean cooking solutions.
For this to happen, the Kenyan government must promote the demand for these products among consumers and increasing taxes on these products will do the exact opposite.
Against this background and considering the challenge on the COVID-19 pandemic, we appreciate the efforts the government has put in place to protect the health of Kenyans.
However, this should not be done in a way to further burden them with higher prices of goods and to the detriment of investors in the sector.
The writer is the CEO of the Clean Cooking Association of Kenya (CCAK).