Kenya Proposes Fifty Percent Fuel Levy Reduction and Mandatory Landlord Tax Registration to Ease Economic Pressure

Treasury moves to halve the road maintenance levy to lower fuel prices, while KRA pushes for mandatory landlord registration on its new digital tax portal.

By: AXL Media

Published: May 2, 2026, 3:25 AM EDT

Source: Information for this report was sourced from TUKO.co.ke

Strategic Adjustment to National Fuel Pricing Structures

The National Treasury has moved to intervene in the escalating cost of energy by proposing a significant reduction in the infrastructure levy attached to petroleum products. Under the newly introduced Road Maintenance Levy Fund Amendment Bill 2026, the government intends to slash the allocation for the Road Annuity Fund from KSh 3 to KSh 1.50 per litre. This fifty percent reduction is specifically designed to create fiscal space within the current pricing model, allowing for lower prices at the pump without completely abolishing the essential maintenance fund.

Mitigating the Impact of Global Supply Volatility

This legislative shift comes as a direct response to recent international supply disruptions and geopolitical tensions, particularly those involving Iran, which have driven local fuel costs to historic highs. Current retail prices in Nairobi stand at KSh 197.60 for super petrol and KSh 196.63 for diesel. By adjusting the levy, the government estimates that motorists could save between KSh 75 and KSh 80 when filling a standard 50 litre tank. This follows a prior intervention where the Value Added Tax on fuel was reduced from 13 percent to 8 percent to stabilize the domestic market.

Infrastructure Repayment and the Annuity Model

The proposed cut directly impacts the Road Annuity Fund, a financial mechanism used to repay contractors who develop national highways upfront. While the reduction provides immediate relief to consumers, it necessitates a recalibration of how the state manages its long term infrastructure debts. For commercial transport providers, such as 33 seater bus operators, the change could result in daily operational savings of nearly KSh 120, a margin that the Treasury hopes will trickle down to reduced transport fares for the general public.