Finance Bill 2016 to lower cost of living, promote use of clean energy


The Finance Bill 2016, which was signed into law by President Uhuru Kenyatta, is projected to triple the number of Kenyans using clean energy while reducing the cost of living as the law seeks to waive taxes on liquefied petroleum gas (LPG) once in force.

Recent data reveals that more than 87 per cent of Kenyans currently use solid fuels for cooking while a mere 5 per cent use kerosene for cooking, which are all forms of unclean energy according to international standards.

However, the new law would halve the number of Kenyans using solid fuel for cooking replacing it with LPG gas as it will be easily affordable and cheaply re-filled.

In Kenya, LPG is commonly used in urban areas, with Nairobi accounting for 60 per cent of the market, followed by Mombasa, which accounts for only 15 per cent while the rest is scattered around other growing urban centres with only one per cent usage in rural areas.

Experts attribute this to low availability of firewood in urban centres, and availability of LPG distribution due to the greater population density.

However, specialists argue that for LPG to reach majority of Kenyans, including those in rural areas, the country has to bring down the cost, create awareness among consumers and increase distribution efficiency.

The Energy Act 2006 stipulates that persons distributing LPG in Kenya must do so in accordance to the terms and conditions of a valid license issued by the Energy Regulatory Commission (ERC) where it requires a person who wishes to conduct wholesale LPG business or filling to apply for a license from the regulator.

Other amendments in the Finance Act 2016 include the removal of excise duty on locally-assembled motor vehicles and motor cycles to promote assembly, tax amnesty for taxpayers who have investments outside Kenya to reinvest back home and VAT exemption for park entry fees and tour operator services to promote tourism.

Others include VAT Exemption for inputs for manufacture of animal feeds, aimed at reducing the cost of the feeds and reduction of income tax corporate tax rate from 30 per cent to 15 per cent for investors who put up more than 400 residential housing units to promote housing development.


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