MPs vote to postpone implementation of VAT on petroleum products

A worker holds a nozzle to pump petrol into a vehicle at a fuel station. MPs have voted to halt price increase on petroleum products for two years. [Photo: REUTERS]

Kenyan motorists and commuters have been handed a temporary reprieve after Members of Parliament voted to stop the 16% Value Added Tax on petroleum products from taking effect.

The bill which was sponsored by Minority Chief Whip Junet Mohammed sought to amend Clause 18 of the 2018 Finance Bill, to postpone the fuel levy increase by two years.

Statement from the National Assembly reads: “The House has this afternoon approved an amendment to Clause18 of the Finance Bill, 2018, sponsored by Minority Whip Junet Mohammed, suspending the implementation of 16% VAT on fuel, which was to take effect on 1st Sept.2018, for a period of 2 years, citing the high cost of living.”

It follows announcement from the Chairman of Matatu Owners Association Simon Kimutai, where he notified commuters of the impending increase on bus fares especially in Nairobi by Sh10 or Sh30.

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The VAT was introduced after the International Monetary Fund (IMF) issued a condition for it to be effected in 2015. IMF gave Kenya Sh150b standby loan which was suspended but was to be reviewed in 2018.

The aim was to ensure that the Treasury can collect enough revenue to bankroll recurrent expenditure and service country’s loans. Motorists within the City were to pay over Sh120 per litre of petrol; with their counterparts in far-flung areas parting with Sh13o per litre.

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