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December 10, 2018

State shouldn't waste new VAT fuel revenue

A fuel station attendant fuels a car at along Moi Avenue Mombasa/FILE
A fuel station attendant fuels a car at along Moi Avenue Mombasa/FILE

We are about to pay 16 per cent VAT on fuel. The price of a litre of petrol will jump to around Sh130, of which around 60 per cent will go to government.

Government originally imposed VAT on fuel in 2013 but it has been postponed several times.

VAT on fuel will be inflationary and will raise costs throughout the economy. But it has benefits.

Firstly, many private-sector companies are today on the verge of collapse because government is not paying its debts. More revenue can clear those liabilities.

Secondly, many Kenyans are in the informal sector and don’t pay tax. A sales tax like VAT is a way of collecting from all Kenyans.

Minority Whip Junet Mohamed wants to lead a revolt in the National Assembly to block VAT on fuel.

It would be better if Junet instead battled to ensure that government spends its tax revenue more prudently. It is bad if government can’t pay its bills but it is equally bad if it is paying unnecessary bills.

 

Quote of the day: "Anyone born and bred in Northern Ireland can't be too optimistic."

 

Seamus Heaney

The Irish poet and Nobel prize winner died on August 30, 2013

 

 

 

 

 

 

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