MPs vote to suspend VAT charge on fuel

Lawmakers also reject Treasury’s proposal to create a housing fund.

Parliament in session. FILE PHOTO | NMG 

IN SUMMARY

  • MPs said the introduction of VAT on petroleum products would at the touch of a button cause a rally in the cost of commodities and transport.
  • The lawmakers rejected attempts to have Kenyans in formal employment contribute 0.5 per cent of their pay to the housing development fund as indicated in the Finance Bill 2018.
  • Treasury Secretary Henry Rotich had pegged the levy at 0.5 per cent of an individual’s pay in his Budget Statement to be matched by a similar contribution from employers up to a maximum of Sh5,000.

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MPs have voted to delay the introduction of 16 per cent tax on petroleum products by two more years, effectively shielding poor household from a spike in the cost of living starting Saturday.

MPs said the introduction of the value-added tax on petroleum products would at the touch of a button cause a rally in the cost of commodities and transport.

“This House has been accused of not being sensitive to the needs of the people. It is time we side with them and I plead that we postponed this tax to 2020,” Junet Mohamed, who moved the amendment said.

The amendment now means that the tax will take effect on September 1, 2020.

This is the third time the implementation of the tax is being suspended, having been deferred twice in the last two financial years.

Nairobi motorists would have paid a record Sh131.93 per litre of petrol or about Sh18.20 more beginning September 1.

At that price, Treasury would be taking Sh57.57 from each litre of petrol sold in the city.

At the same time, MPs have shot down Treasury’s proposal to create a National Housing Development Fund, that would have seen employers and employees contribute 0.5 per cent of their pay.

The lawmakers rejected attempts to have Kenyans in formal employment contribute 0.5 per cent of their pay to the housing development fund as indicated in the Finance Bill 2018.

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