The Government did not follow the due process in the introduction of eight per cent Value Added Tax (VAT) on petroleum products, a parliamentary watchdog has said.
Parliament’s Committee on Delegated Legislation concluded that the levy, effected through the 2018 Finance Bill, failed to meet the threshold for stakeholder engagement and public participation.
The move now exposes the controversial tax to litigation, challenging its legality.
Kenya Revenue Authority (KRA) commissioners were put to task to provide documentary evidence of adequate consultations between Treasury and Parliament as well as a public participation process prior to the introduction of the levy. “The regulations were not forwarded to Parliament and there is no evidence whatsoever and you have not been able to provide any to us,” said the committee chairperson Gladys Boss Shollei during a meeting with KRA officials at Parliament’s Continental House.
“They were never tabled before the House and they are not on the schedule of any parliamentary proceedings.”
Treasury last year proposed implementing 16 per cent VAT on petroleum products but this was later halved to eight per cent in the Finance Bill 2018 after intense lobbying and complaints from the private sector and members of the public. KRA commissioners present threw the ball in Treasury’s court, saying the ministry was best placed to clarify whether Parliament was duly informed.
“The two key documents we received from the Treasury are the minister’s budget speech as well as the letter he sent to parliament,” said Mohamed Omar, commissioner in charge of strategy, innovation and risk management at KRA.
The revelation now opens the Government to litigation on the legal standing of the tax that was roundly opposed including attempts by Parliament to block enactment of the Finance Act 2018.