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September 21, 2018

KRA defends 16% fuel levy, says all taxes are punitive

National Treasury Cabinet Secretary Henry Rotich leaves Parliament after meeting with speaker of the national assembly over the controversial finance bill that imposed the 16 percent VAT Tax on Petroleum products. September 6, 2018. Photo/Jack Owuor
National Treasury Cabinet Secretary Henry Rotich leaves Parliament after meeting with speaker of the national assembly over the controversial finance bill that imposed the 16 percent VAT Tax on Petroleum products. September 6, 2018. Photo/Jack Owuor

The Kenya Revenue Authority has defended implementation the 16 per cent VAT on petroleum products.

The levy has caused a public uproar across the country. But in a document filed in court, KRA says the application against the tax is baseless and without merit. It calls it an abuse of court process that should be dismissed.

The tax agency was responding to the case filed last week by activist Okiya Omtatah.

“A provision imposing tax can’t be said to be unconstitutional for reasons that the same is deemed oppressive. Indeed, in its very nature, taxation is punitive,” KRA argued.

Through lawyer Kenneth Kirugi, it says that the petitioner seeks the court to bequeath itself with both the executive and legislative powers in violation of the doctrine of separation of powers.

It adds that the Constitution confers on the national government the powers to impose income tax, VAT and other duties on import and export goods.

“Article 201 makes this imposition of tax under Article 209 to be subject to legislation,” KRA says.

Read: KRA maintains 16% VAT on fuel in effect, asks dealers to file returns

It warns that the petition amounts to asking the court to suspend the operation of a law even before the court can satisfy itself that the law is unconstitutional.

KRA says it has at all times drawn its powers to levy taxes from the National Assembly — the body mandated to make and enact laws as per the Constitution.

In the case, Omtatah seeks to have the tax suspended. He argues that the decision to impose the new levy has a negative impact on members of the public and should be suspended, pending determination of his case.

He says Treasury CS Henry Rotich defied Parliament by implementing it. MPs had suspended it but President Uhuru Kenyatta had yet to assent.

Rotich enforced the new tax measures on September 1 and the Energy Regulatory Commission followed by adjusting fuel prices to factor in the tax.

The decision has sparked protests from with Kenyans calling on the President to assent to the Finance Bill, 2018, which suspends the levies.

The tax was factored in the Finance Act, 2013. It was delayed for three years and another two years, which elapsed last month.

Last week, the High Court in Bungoma suspended implementation of the tax until the case is concluded, but prices have remained the same since the order was issued.

Also See: Why fuel prices shot up, Governemnt collects Sh38 levies, taxes per litre of petrol

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