MPs seek to save Kenyans from high tax on fuel

National Assembly Minority Whip Junet Mohammed. [file, Standard]
Kenyans could be saved the burden of shouldering high taxes on petroleum products if MPs approve a proposal by Minority Whip Junet Mohammed.

The implementation of the contentious 16 per cent Value Added Tax (VAT) contained in the Finance Bill, 2018, could be deferred until September 2020 if the legislators heed to public pressure.

According to Mohammed (right), introducing taxation on petroleum products portends tough times for low income earners.

The proposal by the Suna East MP, which is already before the House, seeks to cushion Kenyans from the high cost of living. “Kenyans are going through tough times and it is only fair that we suspend the implementation of this VAT until the right time,” said Mohammed.

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The Bill went through the second reading yesterday, and the House will consider amendments when it goes to the Committee of the whole House today.

The Finance Committee, which the MP chairs, wants the committee of the whole House to amend Clause 18 by deleting expression 1st September 2016 and replace with 1st September 2020.

The MP stressed that the two more years will enable taxpayers to deal with harsh economic times.

The proposal for the introduction of the VAT was contained in the 2018/19 Budget speech delivered in Parliament by National Treasury CS Henry Rotich in June.

Rotich argued that it was in line with Kenya’s promise to the International Monetary Fund (IMF) two years ago.

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VAT was first introduced on petrol, diesel, kerosene and jet fuel in the VAT Act of 2013, with a three-year grace period that would have seen it come into force in 2016 but was once again deferred to September 2018.

The IMF has been piling pressure on Kenya to do away with tax exemptions as part of a wider plan to grow revenues, reduce budget deficits and ultimately slow down the debt pile-up that has in recent months become a source of national concern.

The Central Organisation of Trade Union Secretary General Francis Atwoli has threatened to call a nationwide strike if the Government implements the proposed tax, which is set to take effect on Saturday.

He said workers would reject poor policies from the Government, which he alleged had destroyed the economy and left workers poor.

The Matatu Owners Association has already vowed to hike fares by 30 per cent should the VAT be implemented.

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MPsTaxesTax on petroleum products