Uhuru returns home amid fuel tax talks

 

A scramble for fuel in Karen, Nairobi, after the government slapped a 16 per cent VAT on petroleum products prompting a distributors' strike that in turn created a shortage. President Uhuru Kenyatta is expected to assent, reject, or send back to parliament, with suggestions,  the new VAT law. [Elvis Ogina, Standard]

Kenyans have eagerly waited for the President in the hope that he will trigger the suspension of the tax that led to a country-wide fuel crisis.

President Uhuru Kenyatta was expected to arrive yesterday evening even as the debate on the fuel tax rages.

President Kenyatta travelled to Beijing last week for the China-Africa summit that ended on Tuesday. Kenyans have been eagerly waiting for his return in the hope that he will trigger the suspension of the 16 per cent value added tax that took effect on September 1.

The outrage that greeted the tax prompted Treasury CS Henry Rotich to last Thursday to meet with the National Assembly leadership. A follow-up meeting is scheduled for today during which proposals from budget technocrats to resolve the crisis are expected to be tabled.

However, sources said the Executive was adamant about retaining the VAT on petroleum products as well as other tax measures MPs rejected in the Finance Bill, 2018.

A Parliament official yesterday told The Standard that the technical team had held “other meetings” after the Thursday crisis session co-chaired by National Assembly Speaker Justin Muturi and Treasury Cabinet Secretary Henry Rotich.

The team has been instructed to come up with solutions as soon as possible to allow President Uhuru Kenyatta to act once returns to the country.

Treasury is reportedly pushing Parliament to allow the fuel tax to take effect, noting that its suspension for another two years would hamper essential services and key Government projects.

Mr Rotich reportedly told the National Assembly leadership that the Government might have to review some of the free services it offered to the public due to revenue shortfall if the VAT on fuel products is suspended.

Treasury is hoping to collect Sh70 billion from the levy.

Free maternal health care and free primary and subsidised secondary education are some of the services the government could reconsider should Parliament refuse to rescind its decision.

But some view the warning by Government on the populist programmes as an attempt to counter public opposition to the taxes considering there are other non-priority expenditures that could be targeted.

Deputy President William Ruto at the weekend said Treasury would engage MPs on the best way to resolve the problem so that services and capital projects do not stall.

Development agenda

“The National Treasury is engaging MPs so that we ensure our development agenda does not stop, to ensure we have enough money for roads, to support education in primary and secondary,” Ruto said.

Yesterday, Mr Muturi – who is the official spokesperson of the joint technical team – measured his words when contacted over the talks.

“I don’t know, but it is possible,” he said when asked whether the team would have another meeting today.

The parliamentary leadership will today have a day-long meeting with Treasury and the Controller of Budget in Mombasa.

However, Minority Leader in the National Assembly John Mbadi said the meeting was not about the fuel crisis.

“The meeting in Mombasa is between Parliament, the Controller of Budget and the National Treasury on budget implementation,” said Mr Mbadi.

Jubilee Secretary General Raphael Tuju said it was "insidious" for MPs to tell the public that the buck stopped with the President over the controversial tax. Mr Tuju, who was part of the President’s delegation to China – said the law did not allow the President to assent to a budget whose streams of revenue and expenditure do not balance.

He said MPs cannot pass a budget and later shoot down some of the tax measures by Treasury to finance the budget.

Balanced budget

“The Constitution requires Parliament to submit a balanced budget to the President. If Parliament rejects a taxation regime, then they have to remove some budgetary allocations.

“Are governors ready to take 16 per cent off their budget? Are MPs ready to take off 16 per cent off their CDF?” he asked.