Cord MPs draft Bill to amend law on tax

Former Prime Minister Raila Odinga address the press after a meeting of Cord MPs. MPs allied to Cord have prepared a Bill to amend the VAT law and make more goods and services exempt from paying that category of tax.

What you need to know:

  • Passed by the National Assembly on August 6, implementation of  the VAT Act has been blamed for the increased cost of goods, particularly food.

MPs allied to Cord have prepared a Bill to amend the VAT law and make more goods and services exempt from paying that category of tax.

If the Bill is approved for introduction in the House, it could mark the next political battle between Jubilee and Cord coalitions because MPs in the ruling alliance have hinted their plan to oppose it.

Among the goods that would fall under the exempt category if the Bill is passed are infants’ milk, processed milk, materials used to make animal feeds and insecticides.

Others include fishing nets of man-made materials, mosquito nets, rodenticides, fungicides, herbicides, disinfectants, ambulances and hearses and newspapers, journals and periodicals.

The services that would fall under this category are credit reference bureaux, sanitary and pest control in households, postal services, M-Pesa for amounts less than Sh10,000, and the supply of water drilling services.

Electricity would be cheaper as the supply of power to homes would be restricted to 200 kilowatt hours and the Rural Electrification Authority would also be exempt from paying VAT.

“This is informed by the public outcry over the skyrocketing prices of essential commodities,” Suba MP John Mbadi, who drafted the Bill, said Thursday.

Cord agreed to make the changes to the Act at their Parliamentary Group meeting last Monday.

Mr Mbadi said the Treasury and the Kenya Revenue Authority should have taken some time to explain the categories of goods that would be affected before effecting the law.

“The mistake that the government has made has distorted the economy by giving wrong signals. I would urge that action be taken after the amendment to ensure that the country is aware of the effect to avoid that,” said Mr Mbadi.

Passed by the National Assembly on August 6, implementation of  the VAT Act has been blamed for the increased cost of goods, particularly food.

House rules state that an Act can only be amended six months after its enactment but Mr Mbadi said he would ask the Speaker to use his powers and allow the revision.

“The same Standing Orders have a provision allowing the Speaker to set aside that rule,” he said.

Accompanied by Ababu Namwamba (Budalang’i, ODM) and Samuel Arama (Nakuru Town West, ODM), Mr Mbadi said he was optimistic the Bill would be ready for introduction in the House in a fortnight.