Consumer lobby threatens legal action over VAT law

By MACHARIA KAMAU

A consumer lobby has taken the government to task over the commencement of the Value Added Tax Act 2013 on Monday.

The Consumers Federation of Kenya (Cofek) on Tuesday said Treasury had moved unnecessarily quickly to bring the law into effect.

“Cofek notes with concern that the National Treasury has suspiciously rushed the controversial VAT Act 2013 into effect without putting in place mechanisms for a seamless transition from the repealed Cap 476,” said Stephen Mutoro, Cofek’s secretary-general, in a statement.

“As a result, major confusion reigns both in the market as well as for consumers. Implementation of the VAT Act 2013 will realise more challenges than the noble intentions behind it.”

He said that without the necessary supporting mechanisms, the taxman would be denied the money it is seeking.

Cofek wants the implementation of the law pushed to a later date.

The lobby is also threatening to challenge certain aspects of the legislation in court, arguing that it will deprive Kenyans of their basic rights.

Complex market

“Given a complex market such as Kenya’s that is largely controlled by cartels other than the government, the rise and rise in consumer prices will be unstoppable,” said Mutoro.

“The VAT Act purports to take away the rights and privileges offered under the supremacy of the Constitution of Kenya under Chapter 4 of the Bill of Rights.”

Treasury, in a gazette notice on Friday, said the VAT Act would come into effect on September 2.

The law brings into the tax bracket items that were previously VAT-exempt or zero-rated — including milk, books, fertiliser and cooking gas — as the government tries to increase revenue collections.

It was passed by Parliament early last month and assented to by President Uhuru Kenyatta a few weeks later.