REDESIGNING THE EXCISE TAX SYSTEM IN KENYA: TAXATION OF PETROLEUM PRODUCTS
Loading...
Date
2026
Authors
Simon Basescu
Rose Ngugi
Alex Oguso
Nathan Remcho
Zainabu Rono
Journal Title
Journal ISSN
Volume Title
Publisher
AERC
Abstract
This paper examines the structure, implementation, and socioeconomic impact of petroleum pricing in Kenya, with a particular focus on excise taxation. As a major source of government revenue, the petroleum excise tax plays a critical role in financing public expenditure, while also exerting significant influence on inflation, transportation costs, and broader economic activity. The study begins with a review of Kenya’s regulatory framework for petroleum pricing and situates it within a regional context. The paper evaluates how changes to the excise tax affects both government revenues and the differential impact to households across income groups, using data from the Kenya Continuous Household Survey (KCHS). It also presents simulated policy scenarios to explore the trade-offs between fiscal revenue and socioeconomic outcomes. The discussion further considers substitution effects, behavioural responses, and long-term economic and environmental implications. Overall, the findings provide evidence to support the development of petroleum tax policies that are both fiscally sustainable and socially equitable.