MPs warn of food riots over VAT hike

By Antony Gitonga                               

Over 30 MPs and financial experts have warned of a food riot in the country if the controversial Value Added Tax (VAT) bill is enacted by parliament.

The MPs  called on the government to withdraw the pending bill terming as draconian and a recipe for riots adding that that it will see food prices nearly double.

In a meeting in a Naivasha hotel, the legislators vowed to lobby their colleagues in the August House to reject the bill that has been brought by the treasury.

The bill seeks to introduce a sixteen percent VAT to all goods and services that were previously zero-rated or exempted from taxation.

Once enacted the prices of maize flour, milk, kerosene, farm inputs, sanitary pads, mosquito nets, jet fuel, infant food, exercise books, tourism services among many other items will rise.

Former cabinet minister Najib Balala wondered why the bill was been rushed warning that it would stagnate development and further impoverish the poor.

“The bill has come at the wrong time and will cause food riots and we call on the executive to withdraw it soonest possible,” said the Mvita MP.

Balala pointed out to the tourism sector as one of the biggest losers adding that with competition from other countries, the bill spelled doom for the growing sector.

He called for broader consultation noting that it would affect the development of new hotels as the bill sought to introduce 16 percent on construction materials.

Mp Aden Duale echoed the sentiments terming the move to enact the bill as unattainable adding that it could bring down the agriculture sector and send away investors.

“We shall lobby our colleagues to reject the bill as it not meant to benefit the poor person and it is not in line with Vision 2030,” he said.

Duale warned that the bill would adversely affect capital projects like the Tatuu city, Port of Lamu, Konza City and others with the cost of construction going up.

Mp Charles Kilonzo expressed his shock over the bill saying that the government had lost touch with the mwananchi as he called for the President to recall it.

“The treasury should head to real estates instead of introducing taxes on sanitary pads, food items, farm inputs as this will only lead to food riots which as Mp we shall support,” he said.

Legislator John Mbandi termed sections of the bill as worrying as they could affect cost of basic needs but called on Mps to look at positive sides of the bill.

“In many cases the consumer does not benefit from goods zero-rated or exempted from tax and there is need to put a standard tax rate for all goods.

Mr Martin Kisuu a regional tax partner with PKF accountants accused the Treasury of trying to overhaul the current tax regime through the VAT bill by making it more aggressive.

He called on treasury to seek more revenue by taxing the wealthy and going to the stock exchange instead of overburdening poor Kenyans.

“The bill is been pushed by outside forces, its unworkable, unpopular and could negatively affect the lives of millions of Kenyans once enacted,” he warned.

The Kenya Association of Tour Operators through their treasurer Mr Fred Odek said that the bill spelled doom for the sector.

He said that Kenyans main competitors Tanzania and South African did not have such a bill and many tourists would shy away due to the high charges and services to be introduced.

“We see a situation where our competitors will take advantage of the bill and this will see the much relied tourism sector come to its knees,” he said.
 

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