Groups protest planned amendment to VAT Bill

Civil Society groups march to Parliament Buildings where they presented a petition demanding that maize meal should be sold at Sh30, yesterday. [PHOTO: ALI ALALE/STANDARD]

By ABIGAEL SUM

Nairobi, Kenya: Civil Society groups staged a protest against the new VAT Bill, which proposes a 16 per cent Value Added Tax on commodities.

Civil society Congress President Morris Odhiambo said if the Bill is retabled in the House, majority of Kenyans who live on less than a dollar a day will bear the greatest brunt.

“If the Bill is reintroduced, its potential impact on the poor will be huge as the prices of basic commodities like maize, milk, bread and sanitary towels will go up,” he said.

Odhiambo said the Bill is against Article 43 of the Constitution on social and economic rights which covers the most basic needs of Kenyans.

“Our leaders seem to be scrambling for our resources and are not concerned about the people. We will go to sleep one day with 50 per cent of the population living on less than a dollar a day only to wake up the next day with over 70 per cent living on less than a dollar a day. The only way to safeguard the poor is to implement Article 43,” he added.

He said it was unfortunate that the Government does not seem to have a plan to help the poor.

The activists assembled at Tom Mboya monument before marching to Parliament Buildings as their three-day civic action entered its second day.

Essential commodities

The activists also want tax collection to be free of corruption and efficient so that its benefits can trickle down to the rest of Kenyans.

In his Budget Statement this month, National Treasury  Secretary Henry Rotich proposed the reintroduction of the VAT Bill, saying if passed into law, it would help increase revenue collection by Sh10 billion.

The Bill was shelved last year by the 10th Parliament after MPs, activists, consumer lobbies and manufacturers opposed it over its implications on the cost of living.

If passed, the price of a number of essential commodities such as milk, maize and wheat flour is expected to go up, with the Bill proposing that processed agricultural commodities be struck off the list of VAT exempt items.

Other items removed from the tax-exempt list include animal feeds, agrochemicals, newspapers, sanitary pads and cooking gas, all deemed essential.

This means that prices of manufactured goods will go up by anything from16 per cent, which is the standard VAT rate, should the proposed Bill become law in the current condition, as manufacturers of commodities increase costs to recover money paid to the taxman.

The review is expected to bring about a simple and modern legislation and increase the tax base.

“There have been numerous amendments to the current Act, which is a show that there are issues of clarity, and the aim of the review is to make it simple and clear. It will help in addressing challenges for both the tax payers and tax administrators,”  the director of Economic Affairs Department at Treasury said when he presented the proposed VAT Bill to industry players.