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Why Kenyans must brace for hard times

Zachary Ochuodho @zachuodho

Kenyans should brace themselves for tough times ahead if the proposed 16 per cent Value Added Tax (VAT) on petroleum products is implemented as planned on September 1. 

Implementation of the proposal has been deferred twice in 2016 and 2017 due to its cost implications on goods and services including that of transportation rising drastically. 

The proposed tax will increase fuel prices by up to Sh17 per litre. Under the new development, prices of petroleum will rise to Sh131.93 in Nairobi, while diesel and kerosene will jump from the current Sh102.74 and Sh84.95 per litre to highs of Sh119.38, and Sh98.54, respectively. 

Following the impending implementation, Matatu Owners Association (MoA), yesterday said its members would adjust fare upwards by at least Sh10 to Sh30 for the shortest distance covered. Chairman of the association Simon Kimutai said the fare has been adjusted on all the routes.

“The 16 per cent VAT on petroleum products is set to raise the cost of transport in a proportion that has never been witnessed before,” he said.

He said the government should  look for funds to support its activities elsewhere instead of imposing the 16 per cent VAT on petroleum products as that is bound to affect everything.

“We will have no option but to pass the VAT charges on petroleum products to consumers. Given the proportion of the rise in VAT, what we have added is not much. We cannot bear the taxes alone without passing it over to consumers,” Kimutai said at a press conference in Nairobi yesterday. 

Kimutai also decried the manner in which the traffic police fleece members of the association, saying that billions of shillings are lost annually due to police extortion. He urged the government to undertake a life audit to ensure that police officers who live beyond their known sources of income is rooted out of the force. 

“We shall expose them for fleecing members of the sector. If they are not arrested, we will be forced to use our gadgets to expose them,” he said. 

Kimutai’s concern comes a week after Kenya Association of Manufacturers and Central Organisation of Trade Unions (Cotu) threatened to call a nationwide strike if the Treasury does not drop the levy. Benson Okwaro, Deputy secretary general said attempts by National Treasury to put a levy on petroleum products is expected to raise the cost of living and strain the operation and growth of businesses in the country.

“A situation that often pushes employers into devising new ways of keeping their businesses afloat leading to downsizing and/ or redundancy of workers,” Okwaro said. He said they had called for a meeting of all like-minded Kenyans and associations  this week to chart the next course of action, adding that the new levy on petroleum must be stopped as it would increase the cost of living.

 “Cotu cautions the government against this move in view of the possible repercussions of imposing higher tax on fuel as it will, in the long run,  affect the cost of basic services and commodities,” he said.

 Okwaro said although it is the duty of the government to protect and cushion every citizen against any possible harsh economic realities, it is disturbing that the cries of Kenyans for it to come to their help remains unheeded.

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