EDITORIAL: Suspend fuel levy for Uhuru’s word on law

fueling car
ERC on Saturday released new fuel prices that reflect the 16 percent VAT. FILE PHOTO | NMG  

The Treasury has attracted widespread condemnation after the Kenya Revenue Authority began levying 16 per cent VAT on petroleum products on September 1 despite a two-year extension vote by Parliament.

The announcement has since been greeted with multiple layers of price increases, starting with the Energy Regulatory Commission which immediately adjusted fuel prices on Saturday.

The ripple effect of the VAT charge is being felt far and wide as players in the production chain take turns to interpret the tax in their favour, much to the grief of the consumer.

Yet as this happens, the MPs, who make laws on behalf of the people, had in their wisdom voted to delay implementation of the VAT to September 1, 2020.

Only because the amendments were made late, just two days to the implementation timeline, the Treasury appears to have gotten a window to impose this regressive tax.

The mood in the country, as reflected in Parliament, is that the economy is not ready to shoulder a consumption tax whose burden falls heavily on the poor.

We may not be in a position to second-guess President Uhuru Kenyatta’s move with regard to the amendments that have been presented for his signature but the haste with which the KRA and Treasury have approached the matter leaves a lot to be desired.

Kenyans understand that the law imposing VAT on petroleum products was passed two years ago but has been on suspension since then to give the economy a breather.

One then wonders why the Treasury could suddenly not wait for just one more week to see what action President Kenyatta takes. Or is National Treasury Secretary Henry Rotich privy to some information that hasn’t been made public?

Otherwise, why would KRA, which has itself had a problem refunding VAT in the past, collect higher taxes on fuel when there is a chance that the President may assent to the amendments as passed by MPs?

Lest Mr Rotich forgets, Kenyans are still asking what happened to higher taxes that KRA began to collect at the start of this financial year before the High Court declared them illegal as MPs had not approved the 2018/19 Finance Bill.