President Uhuru Kenyatta has two weeks to sign the Bill that suspended the 16 per cent value added tax on petroleum products for another two years after MPs voted on the amendments last Thursday.
Pressure mounted on the President to assent to the Finance Bill, 2018, which deferred the tax until September 2020.
National Assembly Majority Leader Aden Duale said the clause on petroleum tax in the 2016 Bill came into effect on September 1 and would only be suspended if the President signs the current Bill.
But with a binding agreement the Government entered into with the International Monetary (IMF) in 2015 to effect the tax, Uhuru is in a dilemma whether to side with the already overtaxed Kenyans or to bow to the whims of IMF, which has demanded the effecting of the new VAT as a condition to give Kenya loans.
National Treasury CS Henry Rotich had told IMF the Government was committed to abolishing tax exemptions on petroleum products, indicating its determination to raise more revenue internally.
Mr Duale said Kenyans will have to bear the high cost of living until the President either signs the Bill or returns certain clauses he does not agree with to Parliament.
“Once the President assents to the Bill, it becomes law. Minus that, the 2016 Bill that says the 16 VAT tax comes into effect on September 1, 2018 remains,” said Duale.
Leaders urged Uhuru to reverse the new VAT that would affect all commodities and lead to inflation.
Baringo Senator Gideon Moi said the Government decision to effect the new tax on petroleum products would hurt poor Kenyans most.
“Though the Government needs the money to fund development projects, the ripple effects of implementing the new tax have far-reaching ramifications, which include high cost of living, rising inflation, loss of jobs and will also slow the growth of the economy,” Gideon said.
He added: “This will make life more difficult for Kenyans, especially the ordinary mwananchi who should be cushioned and not condemned to misery by the Government.”
Opposition Leader Raila Odinga asked Kenyans not to worry, terming the implementation of the new tax 'short-lived'. Raila said the decision by the MPs to amend the law and suspend implementation of the tax must be respected.
“MPs have passed an amendment to suspend the tax and be sure President Kenyatta will assent to it,” he said.
ANC leader Musalia Mudavadi accused MPs of delaying the resolution on the Bill when they were aware that it takes two weeks to come into effect.
He said the Treasury had no reason to increase the tax, “other than agreeing to be bullied by the World Bank".
“Uhuru should save Kenya from turmoil by signing into law the amended Finance Bill and gazetting it. This will arrest disaffection with Government’s appetite to fleece Kenyans through taxes,” he said. Minority Leader John Mbadi said over-borrowing had made the country vulnerable to the international lenders.
“IMF... wants the country to tax everything for their own interest,” said Mr Mbadi.