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MPs consider postponing new fuel tax

Dinah Ondari @dinahondari

The plan to introduce 16 per cent Value Added Tax (VAT) on petroleum products could be delayed for two more years if MPs agree with a proposal by the National Assembly Minority Whip Junet Mohamed. The Suna East MP has filed  an amendment to the Finance Bill 2018 to have the levy postponed  for two years.

He  argued introduction of the VAT portends tough times, especially for the low-income earners and wants its implementation suspended until September 2020. MPs yesterday concluded debate on the bill and are set to move to the committee stage today where the House will consider proposed amendments to it.

“Kenyans are going through tough times and it is only fair that we suspend the implementation of this VAT until the right time,” Mohamed said yesterday. The proposal for the introduction of the VAT was contained in the Budget speech delivered to Parliament by the National Treasury Cabinet secretary Henry Rotich last June.

Among the amendments  which have been proposed by the   Finance Committee is exemption of some transactions from the 0.05 per cent tax on money transfers amounting to Sh500,000 and above while giving Rotich a free hand to make any other exemptions. The committee has proposed that money from taxes collected by Kenya Revenue Authority and deposited at Central Bank of Kenya be exempted from the new levy.

Should the  committee’s proposals be adopted by the larger House, all transactions of Sh500,000 and above relating to the payment of tax will be spared from the dreaded measure.

The VAT was introduced by Rotich in his 2018/19 budget speech, arguing that it is in line with Kenya’s promise to the International Monetary Fund two years ago.

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