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Rotich, Budget committee seek alternatives to VAT on fuel

Treasury CS, legislators meet to find solution to implementation of tax on petroleum products

Anthony Mwangi and Nancy Gitonga

Treasury Cabinet secretary Henry Rotich and the parliamentary Budget and Appropriations committee yesterday held a session to discuss budgetary cuts to raise funds in place of the recently imposed 16 per cent VAT on petroleum products.

According to a source privy to the discussions held in Mombasa, the committee was contemplating making cuts in budget allocations to ministries.

“We are making headways and are likely to come up with a report in the course of the week,” said the source attending the meeting.

And another team of technocrats drawn from Parliament’s budget office, Treasury and the Office of the Controller of Budgets, met to pick on areas where cuts will be made ready to be tabled before the budget committee for approval.

If the committee is in agreement, then National Assembly Speaker Justin Muturi will call for a special sitting for MPs to debate the motion.  

With the flurry of events taking place, President Uhuru Kenyatta is likely to refer the Finance Bill currently before him to Parliament with a memorandum containing amendments which he would want rectified.  

Uhuru has four days to assent to the bill or reject it and refer it back to Parliament with comments.

If they plan to overturn the President’s memorandum and retain the initial Bill containing the amendment seeking to suspend the imposition of the 16 per cent VAT, the House will be required to raise two-thirds of its membership to triumph.

Last week, Rotich led top government officials, including Attorney General Paul Kihara, for a meeting with Muturi, Leader of Majority Aden Duale, budget committee chairman Kimani Ichung’wa and House Clerk Michael Sialai.

After the meeting, Muturi said the team was optimistic that a solution will be found within the shortest time possible.

“I am very optimistic a solution will be arrived at and all the issues Kenyans are concerned about addressed. This will be achieved through a series of meetings that we have lined up with other stakeholders,” Muturi said after the meeting last week.

MPs have been piling pressure on the Speaker to reconvene the House for them to address the issue which has taken a national dimension resulting in a crisis in the transport industry.

Rotich has since called on Kenyans to be patient while exuding confidence that a solution will be found in the next few days.

“We have started consultations today and in due course, we shall be updating members of the public on the progress but eventually a solution will be found,” Rotich said after the Thursday meeting at Parliament Buildings.

In the Finance bill before the President, MPs unanimously passed an amendment by Suna East MP Junet Mohammed to have the imposition of VAT on petroleum products delayed for a further two years to the year 2022.

According to Article 115 of the Constitution, if the President refers a Bill back for reconsideration, Parliament may either amend the Bill in light of the President’s reservations or pass the Bill a second time without amendment.

If Parliament amends the Bill fully accommodating the President’s reservations, the appropriate Speaker shall re-submit it to the President for assent.

Meanwhile, Kenya Revenue Authority (KRA) have filed their grounds of opposition in the 16 per cent VAT in petroleum products case filed by Okiya Omtatah.

KRA, in their court documents,  says the application challenging the 16 per cent VAT in it’s entirely is baseless, frivolous and without merit adding that it is an abuse of court process and should therefore be dismissed.

“A provision imposing tax cannot be said to be unconstitutional for reasons that the same is deemed oppressive,” says KRA 

In the court papers, KRA says that the petitioner seeks the court to bequeath itself with both executive and legislative powers in total contravention of the doctrine of separation of powers.

Through lawyer Kenneth Kirugi, KRA  argues that the Constitution grants the National government 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,”reads the court documents.

KRA further claims that the  petition by Omtatah is tantamount and asking the court to suspend the operation of a law even before the court  can satisfy itself that the said law is unconstitutional.

KRA filed their responses in a case where Omtatah is seeking to suspend the 16 per cent tax imposed on petroleum products.

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