Outrage greets move to effect 16 percent tax on fuel products

Sunday September 02 2018

Cotu secretary-general Francis Atwoli says the decision by the National Assembly to suspend the introduction of the fuel tax was in line with the thinking of the public. PHOTO | FILE | NATION MEDIA GROUP


The move by the government to impose a 16 percent value added tax on fuel products starting yesterday sparked outrage among Kenyans.

Minority Leader in the National Assembly John Mbadi described the coming into force of the tax as a “crisis” and urged that Parliament be recalled to address the issue.

“It is a crisis that if not properly handled may require Parliament to be recalled to explore ways of doing so,” he said. “It was a mistake from the beginning to conceive this tax,” he said.


Mr Mbadi, also Suba South MP, called on Parliament to amend the value added tax law and do away with the hike in its entirety.

He also rapped Treasury Cabinet Secretary Henry Rotich for not exercising his powers to suspend the introduction of the new tax pending the President’s assent of the Finance Bill, 2018.


The government expects to raise Sh70 billion from the tax but Mr Mbadi said that this figure is a drop in Sh3.04 trillion budget that Mr Rotich unveiled in June.

“The Sh70 billion is a small component of the entire budget and we can explore other ways of raising it instead of robbing the poor to fund the budget,” he said.


The Central Organisation of Trade Unions (Cotu) and the Consumer Federation of Kenya (Cofek) separately accused both the Kenya Revenue Authority (KRA) and Treasury of undermining Parliament, which had voted to postpone the introduction of the new tax until 2018.

“We have opposed this tax as much as we condemn KRA and National Treasury,” said Francis Atwoli, the Cotu boss. “We ask them to respect Parliament as the expression of sovereign will of the Kenyan people.”

Mr Atwoli said the decision by the National Assembly to suspend the introduction of the tax was in line with the thinking of the public, noting that the House had spoken on behalf of Kenyans and the two were duty bound to respect the decision


“Both KRA and the National Treasury must brace themselves for tough times ahead. It will not be easy for them because we are moving to court to challenge KRA’s decision,” Mr Atwoli said, hinting that Cotu may resort to peaceful demonstrations to force the government to abandon the tax.

Siaya Senator James Orengo called on President Kenyatta and Nasa leader Raila Odinga to ensure that the Finance Bill, 2018 is passed to cushion Kenyans from high cost of living.

“Just like they did during the handshake, I call upon the two leaders to come together for the sake of Kenyans and make sure that life is better for everyone,” he said yesterday during a house warming ceremony for Siaya Governor Cornell Rasanga in Segere.


Kenya National Union of Teachers (Knut) secretary-general Wilson Sossion said the increase will hurt poor households and make living more difficult for Kenyans.

“It’s quite hurting for workers and ordinary Kenyans. It shall widen social inequity,” said Mr Sossion in a statement from Turkey where he is attending an education conference.

He went on: “Social inequity is a big issue in Kenya and the burden of public debts is transferred to the poor. This makes living quite unbearable and difficult.”

The additional fuel charges are contained in the Finance Act 2013 and are in line with Kenya’s promise to the International Monetary Fund (IMF) six years ago to do away with tax exemptions as part of a wider plan to grow revenues, reduce budget deficits and ultimately slow down the debt pile-up that has in recent months become a source of national concern.


The tax was first introduced on petrol, diesel, kerosene and jet fuel in the VAT Act of 2013, with a three-year grace period that would have seen it come into force in 2016.

However, MPs voted to defer its introduction to September 2018. Again, last Wednesday, during the debate on the Finance Bill 2018, MPs overwhelmingly voted to suspend the tax for another two years. Cofek secretary-general Stephen Mutoro wondered how the KRA and National Treasury could veto the decision of Parliament.

“Both of them are creations of Parliament. Mr Rotich was vetted by Parliament and KRA is answerable to Parliament. Just how can they veto the decision of Parliament,” Mr Mutoro wondered, arguing that the only explanation is that its impunity and advancement of personal interests.


“KRA is no supervisor of either Parliament or Energy Regulatory Commission. But the elephant in the room is they both Mr Njiraini and Rotich are reporting directly to IMF,” he said promising to start a series of mass demos to protest that role of IMF in the matter. In Kakamega, two MPs called for impeachment of Mr Rotich accusing him of undermining Parliament by effecting the tax increase.

Senator Cleophas Malala and nominated MP Godfrey Osotsi said it was unconstitutional for the CS to disregard Parliament’s resolution to suspend the tax.

“Once again, the overtaxed Kenyans are going to feel the pain of over-borrowing by the government as the price of fuel shoots up,” said Mr Osotsi.


Addressing journalists at the Golf Hotel in Kakamega town, Mr Osotsi promised to summon Mr Rotich to appear before the committee to explain why he defied parliament.

“Parliament is the only organ mandated by the constitution to make laws. It speaks with finality and what remained was for the President to assent or reject the amendment to the Finance Bill, 2018. Why is the CS in a hurry to implement part of the Bill without knowing its fate?” he paused.

Mr Malala called on members of both Houses — National Assembly and the Senate — to lobby for impeachment of Mr Rotich from the Treasury docket saying he was becoming a thorn in the flesh of Kenyans.

Ganze MP Teddy Mwambire and his Magarini counterpart Michael Kingi said the CS ought to respect the decision of Parliament.


“CS Rotich should be held responsible for insubordination of the National Assembly. The constitution gives exclusive mandate to Parliament to decide but not either the finance Cabinet Secretary or even the president,” said Mr Mwambire.

“It is not right for the CS to go ahead and implement what Parliament had not endorsed. I know he will have to be called to Parliament and explain the reason for his action,” said Mr Kingi.

Speaking to the Nation, Kenya National Chamber of Commerce chairlady Rukia Rashid said that the plan of the government to increase the fuel prices is a “mistake.”

“The rise in the fuel prices is mistake and public participation is mandatory before such decisions are made,” she said. “The citizens will suffer because this will mean the prices of all products will go high,” she said.