What next? Bungoma High Court suspends 16 percent tax on fuel

The High Court in Bungoma on Thursday suspended the decision by Treasury to levy a 16 per cent Value Added Tax (VAT) on petroleum products. This, pending the hearing of a petition filed by three residents from Kisumu.

Through their advocate Kenneth Amondi, Titus Alila, Jackline Otieno and Francis Ogada, the petitioners argued before  Justice Stephen Riechi that the new tax will raise the cost of living.

The Bungoma ruling has now created confusion. On Tuesday 4, September 2018 Nairobi High Court judge Chacha Mwita declined to suspend the VAT on the grounds that the legislative process was incomplete because President Uhuru Kenyatta had not assented or rejected Finance Bill 2018.     

The Bungoma High Court order suspending VAT on petroleum products pending determination of a suit filed by three Kisumu residents. [Standard Digital]

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What does this mean?

Current pump prices are unlikely to change from what was announced on September 1, 2018 by the Energy Regulatory Commission (ERC). “This notwithstanding if the amendment to the Finance Bill 2018 as passed by the National Assembly is enacted into law the pump process shall be readjusted accordingly..” said a statement from ERC on Saturday.

Following the new tax, the country has experienced a fuel shortage as distributors refuse to collect fuel from depots forcing the government to provide security to mainstream distributors.

On September 1, 2018, the Finance Bill 2013 that imposes VAT on petroleum products finally took effect. The Act had been postponed two times.

Fuel Shortage

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There have been long queues at Nairobi petrol stations as strike by fuel distributors protesting the 16 percent VAT on petroleum products bites countrywide.

However, the Government has swung into action and GSU trucks are escorting fuel distributors from Industrial Area depot.

TreasuryFuel Prices16 percent vat