Light aircraft operators want spare parts exempted from 16 per cent VAT
A DC9-15 jet at Wilson Airport in Nairobi. Aircraft operators now want the government to exempt spare parts from VAT. Photo/FILE
What you need to know:
Parliament was told last Thursday that operations at the Wilson Airport had slowed down as spare parts are too costly for small aeroplane operators.
Light aircraft operators are pushing for the exemption of spare parts from 16 per cent value added tax (VAT) as the withdrawal of aeroplanes hurts operations at the Wilson Airport.
Three parliamentary committees were told last Thursday that operations at the city airport had slowed down as spare parts are too costly for small aeroplane operators.
On behalf of air operators who use the airport, Mathioya MP Clement Wambugu raised the issue with the Budget and Appropriations Committee, Transport Committee and the Finance, Planning and Trade Committee of the National Assembly.
Mr Wambugu appeared before the Mutava Musyimi-led Budget and Appropriations Committee to push for amendments to the VAT Act to exempt light aircraft from paying 16 per cent VAT on parts and other services.
“Mr Chairman, if this matter is not addressed urgently, operations at the Wilson Airport will grind to a halt soon. Air operators have complained of the punitive taxes and are withdrawing their services from the airport,” Mr Wambugu said.
Mr Musyimi directed the Mathioya MP to approach the Finance, Trade and Planning Committee chaired by Ainamoi MP Benjamin Lang’at whose team handled the VAT law last year before it was enacted into an Act of Parliament.
“I am told that you wanted to seek the help of this committee. I hear that the VAT law is affecting operations at Wilson airport. You mentioned to me that taxing spare parts and landing charges for small planes is punitive,” said Mr Musyimi.
Last Friday, Mr Lang’at told the Business Daily the committee had received complaints from the air operators. “We have received numerous complaints and petitions from the airline industry. We also met Mr Wambugu who is pushing amendments to the VAT Bill and we have resolved to invite the industry players on Tuesday,” Mr Lang’at said.
The Ainamoi MP said the industry players and affected firms at Wilson Airport would shed more light on the impact of the VAT Act 2013 before the committee makes a final decision.
“Luckily, we already have [John] Mbadi’s VAT Amendment Bill 2014, which is currently under debate and we will use it to pass other amendments including what will be proposed for the air transport industry,” he said.
Mr Mbadi, the Suba MP, has sponsored a private member’s Bill that aims to reduce the price of more basic goods and services.
The Bill seeks to exempt fishing nets, all types of milk, mosquito nets, ambulances, hearses, sanitary pads, pest-control services, animal feeds, insecticides, fungicides, herbicides and water drilling services from the 16 per cent tax.
The proposed legislation further seeks to have all households, which use electricity of up to 200 kilowatt/hours and supplies to the rural electrification projects exempted from taxation.
MPs supported the amendments and others indicated their intentions to file further amendments to the Bill to remove critical items from the tax bracket.
“We will make amendments that are necessary. We understand that spare parts are now very expensive and are not there. We will look at this issue objectively and agree as a committee on the verdict,” Mr Lang’at said.
The debate on the Mbadi amendments will be concluded Tuesday, paving the way for further scrutiny and amendments at the Committee of the House before passage into law.
“I will be pushing to have this punitive taxes removed otherwise the operations at Wilson airport will grind and the airport closed,” Mr Wambugu said.
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