Why this is not the time to tax clean cooking

The 2020 Finance Bill goes to Parliament with a range of proposals aimed at addressing the devastating impact of Covid-19 on the economy.

While it is understandable that the Treasury is under immense pressure to raise more funds in response to plummeting economic activity, the reduction in the number of goods and services exempted from VAT risks having regressive impacts.

As Taxwise Africa, a prominent tax advisory firm, put it, “these changes will defeat the purpose of the introduction of the exemptions in the first place, which was to boost the growth of the industries, especially since they are essential industries in the Kenyan economy.”

The case of clean cooking is a pertinent example. The government exempted clean cook stoves and Liquefied Petroleum Gas(LPG) from VAT in 2016, a move designed to accelerate uptake of safe alternatives to firewood, charcoal and kerosene-based cooking.

Kenya received international recognition for the forward-thinking decision, and the clean cooking sector has seen significant growth in the intervening years.

The 2020 Finance bill proposes the reintroduction of 14percent VAT on clean cook stoves and LPG, a move that risks increasing the price of clean cooking for consumers and which contradicts government efforts to shift consumers from use of wood fuel to cleaner fuels like LPG and bio-ethanol to conserve our forests and protect families from indoor air pollution. Indeed, the dirty cooking fuels problem persists among the lower income brackets in our society.

As a result, these are the same households, generally located in informal settlements in cities or poorer rural communities, that are most at risk of contracting respiratory diseases and life-threatening cases of Covid-19.

This is because the scourge of dirty cooking is a silent killer in our country, causing more Kenyan deaths every week than coronavirus has done so far. Cooking smoke contributes to a range of acute respiratory impacts, including early childhood pneumonia, emphysema, lung cancer, and bronchitis.

Diseases from dirty cooking are the fourth biggest killer globally: more than tuberculosis, malaria and HIV/Aids combined. In Kenya, 21,560 deaths from dirty cooking every year is more than three times the national road accident toll. This should alarm us all.

Experts have said all along that the elderly, smokers, and those with pre-existing conditions are most at-risk of Covid-19.

Let us therefore not forget that smoke inhaled by women and children while cooking with dirty fuel is equivalent to smoking more than three packets of cigarettes every day, which makes the group vulnerable.

A first step would be to amend the current Finance Bill. The re-imposition of taxes on clean stoves and fuels not only means that they will be out of reach for the low-income consumers, but it also withdraws sector support at a time when it is most needed. With most businesses trying to stay afloat the reintroduction of VAT will be a big blow that will expose more people to respiratory illnesses and render many in the industry jobless.

The writer is Project Director, Partner at Frontier Energy.