Reprieve as date of VAT on fuel deferred

Minority Chief Whip Junet Mohammed. He brought a motion that led to the postponement of the VAT on fuel. [File, Standard]

The tax on fuel has been postponed by another two years.

The 16 per cent value added tax (VAT) on petroleum products was to take effect on September 1 and would have pushed the cost of a litre of petrol to over Sh130.

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Members of Parliament yesterday unanimously endorsed the proposal by Minority Whip Junet Mohammed (Suna East), saying implementing the tax was akin to over-taxing the already overburdened Kenyans.

They also rejected a proposal to deduct 1.5 per cent from the salaries of employed Kenyans to help finance housing.

“Parliament has been accused of not being sensitive to the needs of the people and it is today that we need to a rise to the occasion,” said Mr Mohammed.

Minority Leader John Mbadi and Homa Bay Woman Representative Gladys Wanga rallied the MPs to support the postponement.

Mr Mbadi even proposed that the House do away with the tax, whose re-introduction was among the conditions given to the Treasury by IMF in 2015.

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The contentious 16 per cent VAT was contained in the Finance Bill, 2018.

When chairman of the Whole House Committee, Patrick Mariru (Laikipia West), called for a by way of acclamation, the ayes carried the day.

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

Mr Rotich had argued that it was in line with Kenya’s promise to IMF two years ago.

Housing levy

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Yesterday’s vote on the housing levy was a big blow to President Uhuru Kenyatta’s dream of building half-a-million houses as part of his Big Four agenda.

The contribution was initially pegged at 0.5 per cent but was later increased to 1.5 per cent.

Rotich, through Finance Bill, 2018, had proposed the establishment of a National Housing Development Fund that was to be financed by employers and employees.

TaxFuelVAT on Petroleum ProductsJunet Mohammed