Can’t make ends meet? This is how your MPs contributed to your misery
By Allan Mungai
| September 18th 2021
Members of Parliament often claim to fight for the people who are their employers, but some of their decisions end up hurting the same mwananchi.
Under their watch, the price of fuel and basic commodities, has since 2013 risen to staggering levels.
It is always an anxious time for Kenyans when, in the middle of the month, the Energy and Petroleum Regulatory Authority (EPRA) reviews fuel prices.
Earlier this week, EPRA set the price to a historic new level meaning motorists will now pay Sh134.72 for a litre of petrol in Nairobi.
Diesel will retail at Sh115.60 while a litre of kerosene will cost Sh110.82 this month.
That hike has led to widespread protests from a cross-section of Kenyans, among them, the MPs, now in a lamentation spree and calling for action against EPRA and the Ministry of Energy — which surprisingly only reviews the prices while the operations are domiciled in the Petroleum and Mining ministry.
The MPs’ mad rush in issuing statements and summons to ministry officials is mind boggling as they are the ones who passed the VAT law in 2013 when the economy was stable and suspended its implementation to 2016 and moved it again to 2018, allowing President Uhuru Kenyatta’s administration to raise its appetite for external borrowing.
Dishonest as it may sound, the MPs are calling for control of fuel prices.
The House approved a controversial Bill that increased Value Added Tax (VAT) on fuel to eight per cent and introduced the Petroleum Development Levy last year, which increased fuel prices by a further Sh5.
Further, in December last year, MPs supported the rollback of pandemic tax relief which returned taxation to pre-pandemic figures.
Petroleum prices are subject to excise duty, road maintenance levy, petroleum development levy, railway development levy, petroleum regulatory levy, anti-adulteration levy, merchant shipping levy, import declaration fee and VAT.
When time came for implementing the tax increase, the legislators were up in arms, concerned that the increase in fuel prices would be punitive to Kenyans who were already contending with inflation.
At the beginning of September 2018, Kenya Revenue Authority issued a press statement confirming that 16 per cent VAT would be applied beginning that month.
Allies of Deputy President William Ruto and ODM leader Raila Odinga rose against the move.
However, after consultations with President Kenyatta, ODM announced that they were in support of the eight per cent tax as opposed to 16 per cent.
The president rejected the Bill and proposed a reduction of the VAT to eight percent and budget cuts in various ministries, agencies and parastatals.
The National Assembly voted on the president’s recommended eight per cent VAT on petroleum products and budget cuts aimed at raising Sh55 billion to plug the deficit occasioned by the reduction of VAT on petroleum products.
At the stormy State House meeting then, Uhuru read the riot act to Jubilee MPs resisting his tax proposals. After the two meetings, the MPs went to Parliament for a flurry of press conferences where they insisted they would not back down.
They kept up their clarion call of “zero tax,” referring to zero-rating of petroleum products, arguing it was insensitive to burden Kenyans with more taxes yet they were struggling with the high cost of living and pointed at the sharp rise in bus fares due to an increase in pump prices and the attendant consequences in other sectors.
They pleaded with the government to abandon the push for higher taxes, but in the end, Kenyans were on their own.
Uhuru took away Sh6 billion from the National Government Constituency Development Fund (NG-CDF), Sh5 billion from the National Assembly and Senate, Sh2 billion meant for provision for affirmative action.
By going for what MPs valued most – NG-CDF – they were forced to cede to the demand of the Executive and approved the tax increases that have condemned Kenyans to prohibitive fuel prices.
In June, Petroleum Cabinet Secretary John Munyes told the Senate Energy Committee that inaction by MPs was to blame for rising fuel prices, saying there was need to regularise and review how taxation is done by way of legislation.
In the same month, the Finance and National Planning Committee led by Homa Bay Woman Representative Gladys Wanga rejected proposals by audit firm KPMG to exclude excise duty, fees and other charges in computation of taxable value of fuel products.
It argued the high prices were unsustainable and threatened to further erode the much-needed income apportionment and affordability of other essential commodities.
However, the committee was of the view that the proposal would lead to significant revenue loss and offered that at 8 per cent, the tax on fuel was at a concessional rate.
Although Parliament overwhelmingly passed the Bill into law, setting the stage for a 16 per cent VAT on fuel, the public uproar saw MPs retreat, slashing it to eight per cent.
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