Expect more pain at the pump from today, insists CS Rotich

There was confusion yesterday as to whether the government would start charging Value Added Tax (VAT) on petroleum products today despite Parliament postponing the levy for two years.

National Treasury Cabinet Secretary Henry Rotich was yesterday reported as having dismissed the move by MPs as null and void, saying the VAT on fuel would kick in today.

Observers said the government could be banking on technicalities such as the fact that the Finance Bill 2018 is yet to be signed by the President, without which the postponement would not be valid. A similar suspension in 2016 shelving the VAT on fuel also expired yesterday, meaning the charge imposed by the VAT Act of 2013 would automatically come into effect today.

VAT Act 2013 was suspended for three years, with the government then feeling that the charges would make life unbearably difficult for Kenyans. The suspension was extended by another two years in 2016, with the suspension lapsing yesterday.

“At the very least, this is impunity by Treasury and we are cautioning him (CS Rotich). We are also calling on Parliament to censure him,” said Stephen Muturo, the secretary general Consumer Federation of Kenya (Cofek).

On Wednesday, MPs voted to stop the 16 per cent additional charge from taking effect. Minority Chief Whip Junet Mohammed had proposed a clause in the Finance Bill to postpone the fuel levy increase by two years.

The VAT would push the price of a litre of petrol in Nairobi to over Sh130 and Sh140 in other towns.

Yesterday, Energy Regulatory Commission (ERC) said they had not received a directive from The Treasury.