MPs Start Process to Remove VAT on Fuel

MPs Start Process to Remove VAT on Fuel

Members of Parliament (MPs) have kick-started a process of reviewing the removal of Value Added Tax (VAT) levy from the pricing of fuel products.

On Tuesday next week, September 28th, 2021, MPs in the National Assembly Finance and National Planning Committee will begin their review of a petition to remove the tax on fuel by staging a day-long public consultation forum with respective shareholders.

In a notice published in local dailies on Friday, September 24th, 2021, the Committee says it will seek to establish the cause of the drastic increases in the prices of fuel, establish the amount of revenue raised from each set of fuel taxes and establish the purpose of the fuel taxes and levies.

Further, the Committee is set to interrogate the appropriateness of monthly reviews for the fuel costs, alternative sources of exchequer revenues and the impact of increased fuel prices to the economy and the general welfare of Kenyans.

Following the consultations, the Committee chaired by Homa Bay MP Gladys Wanga is expected to write a report to the House affirming or rejecting the proposal.

Speaker Justin Muturi directed the team chaired by Homa Bay Woman MP Gladys Wanga to attach a draft bill to the report proposing legislative interventions to reverse the situation.

The speaker has further directed the committee to undertake a general and targeted inquiry to confirm whether there could be other reasons beyond taxation causing the fuel rise.

The speaker made the directive following a petition by Antony Manyara and John Wangai seeking an urgent repeal of Section 13 of the Finance Act, 2018.

The duo wants MPs to abolish the 8 per cent Value Added Tax, which staged an increase in the prices of petroleum products.

“The petitioners decry passage of section 13 of the Finance Act, 2018 which amended section 5(2) of the Value Added Tax, 2013 that introduced a Value Added Tax of 8 per cent on petroleum and petroleum products which had previously been tax-exempt,” Muturi told the House on Tuesday.

A similar petition was filed by Matungulu MP Stephen Muli while Dagoretti North MP Simba Arati and his Nominated counterpart Wilson Sossion sought an adjournment to discuss the matter as a special motion.

Parliament on September 24th, 2018, passed President Kenyatta’s proposal to reduce the VAT on petroleum products from 16 per cent to 8 per cent amid protests from some Members of Parliament who were opposed to the proposal and against how the vote was carried out.

The memorandum on the Finance Bill 2018 required 233 majority votes for it to be rejected. There were only 215 members present during the vote.

According to the National Assembly’s Speaker Justin Muturi, the quorum allowed for the vote was not met. “The ‘No’ vote on [8% VAT on Fuel] was lost on the basis that they did not have the required number,” he said.

The Standard reported that the then Majority Leader Aden Duale and the opposition Orange Democratic Movement (ODM) chairman John Mbadi orchestrated a walkout from the House that gave the President’s memorandum a win based on a lack of quorum.