Kudos to MPs for saving poor Kenyans from punitive fuel tax

Today, we want to salute members of the National Assembly for living up to their calling, which is to champion the interests of their constituencies.

Many times we have been hard, even harsh, towards our MPs for being selfish and displaying utter ineptitude when it comes to carrying out their mandate. But on Wednesday, they selflessly voted for the common mwananchi; by shooting down a draconian proposal that would have seen the price of a litre of petrol rise to Sh131, in September, from the current Sh113.

The National Treasury, in an agreement signed with the International Monetary Fund, was supposed to introduce a 16 per cent value-added tax (VAT) on petroleum products, starting tomorrow. This would have seen the cost of living skyrocket beyond the reach of millions of ordinary Kenyans.

Our lawmakers displayed rare empathy for Kenyans, including millions of frustrated youths whose efforts to find jobs have always hit a snag, thousands of workers who have been forced to make do with high monthly bills against measly wages, and hundreds of firms that have had to shed jobs to avoid high production costs.

The new tax on petroleum products such as petrol, diesel and kerosene would have made an already bad situation worse, with prices of basic consumer products going through the roof. Because petroleum is an input used in several sectors of the economy, from mechanised agriculture and transport to manufacturing, the introduction of a 16 per cent consumption tax would have resulted in a surge in the prices of almost everything - from electricity to matatu fares to a meal of ugali and sukuma wiki in a kiosk.

That is why the suspension of the tax was received with such relief by Kenyans from all walks of life.

We know that the decision will leave Treasury, which is under pressure to finance a massive Sh2.5 trillion budget, with a massive hole to plug. Estimates shows that Treasury aimed to raise more than Sh70 billion from this tax.

We appreciate that the money would have gone a long way in helping the Government fund critical development projects, including President Uhuru Kenyatta’s Big Four development agenda that seeks to build 500,000 low-cost housing units, create millions of jobs, ensure food security and nutrition, and roll out health services for all Kenyans by 2022.

However, increasing taxes for Kenyans who are already over-taxed is not the solution. If anything, it only demoralises them. As this publication has noted several times before, there is a lot of pilferage that needs to be addressed. The Government only needs to aggressively seal these loopholes and all will be well.

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Fuel levyvat on petroleum productsNational Treasury