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November 20, 2018

MPs suspend 16% VAT on fuel products

Fuel shortage in Uganda/FILE
Fuel shortage in Uganda/FILE

Kenyans can now breathe easy after MPs yesterday unanimously voted to suspend implementation of the 16 per cent VAT on petroleum products.

The amendment to the Finance Bill, 2018, moved by National Assembly Junet Mohamed was meant to cushion Kenyans from high cost of living.

The Bill meant hard times for low income earners as prices of basic commodities, including bus fares were to rise.

The MPs resoundingly voted for the Junet’s proposal pushing the implementation of the 16 per cent VAT to September 1, 2020.

National Assembly Minority leader John Mbadi said the implementation of the 16 per cent VAT should “be shelved forever”. “We need to postpone the tax for another two years but the House needs to decide after this to do away with the tax altogether,” Mbadi said.

The Suba South MP said implementing the tax would have occasioned an increase in the price of commodities by at least than 10 per cent, further making life harder for most Kenyans. “The transport cost would rise by over 20 per cent. This is an amendment this House must support,” he said.

Read:Think the cost of living is high? Wait till new taxes take effect


In June, Treasury CS Henry Rotich said petroleum products will start attracting 16 per cent VAT from September 1. This will add about Sh17 on every litre of the commodity. Rotich argued the implementation of the Bill was in line with agreements with the International Monetary Fund.

In 2016 it was agreed the government would do away with tax exemptions as part of a plan to grow revenues, reduce budget deficits and slow down debt.

The tax was first introduced on petrol, diesel, kerosene and jet fuel in the VAT Act of 2013, with a three-year grace period. It was to come into force in 2016, but was deferred to September.

Cotu secretary general Francis Atwoli and motorists have protested the tax, threatening to resist implementation of the Bill.

Atwoli last week said they will do everything to block the implementation of the tax, which was to take off midnight tomorrow.

“Kenyans’ pockets have been dug deep and as workers, we will not continue keeping quiet and watch the government destroy our economy through unreasonable taxes,” Atwoli said.

Read:Omtatah challenges 16% VAT on farm pest control products


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