Parliament on Wednesday afternoon elected to suspend by two more years the introduction of 16% tax on petroleum products that was to come into effect on Saturday September 1, 2018.
The National Assembly has voted to suspend the introduction of 16% petroleum levy for two years. The amendment brought on the finance bill by minority whip Junet Mohammed means that the levy will take effect on September 1, 2020 pic.twitter.com/qF2Yz551gf
— NTV Kenya (@ntvkenya) August 29, 2018
Parliament passed the Value Added Tax in 2013, introducing tax on fuel products. Its implementation was, however, given a three-year grace period to September 2016. The government further extended the period by two years to September this year after Treasury raised the Road Maintenance Levy on each litre of petrol and diesel to Sh18 from Sh6 in 2016.
Early in March 2018, the National Treasury had defended the plan to introduce 16 per cent tax on petroleum products from September 1 to collect about Sh34 billion revenue annually.
Treasury Chief Administrative Secretaries (CAS) Nelson Gaichuhie told the Senate’s Energy Committee the government will implement the law in taxing petroleum products but the resultant effect will be an extra cost. However, the International Monetary Fund (IMF) has been pressing Kenya to revoke the tax exemption on all petroleum products for the country to raise more revenue to address the budget deficit and reduce the national debt.
The parliament’s move effectively protected poor household from a projection in the cost of living.
The motion spear header, Minority Whip Junet Mohammed argued that the introduction of VAT on petroleum products would trigger immense rise in the cost of commodities, transport and general costs of living.
We wish to thank @JunetMohamed for moving the motion to have the implementation of the 16% value added tax (VAT) on petroleum products suspended by 2 years. It was to take effect on Sept 1 & would have pushed the cost of a litre of petrol to over Sh130. ODM cares abt wananchi.
— The ODM Party (@TheODMparty) August 30, 2018
“This House has been accused of not being sensitive to the need of the people. It is time we side with them and I plead that we postpone this tax to 2020,” Junet said on the floor of the House.
After the suspension of the bill, the National Assembly in its official Twitter account posted:
The House has this afternoon approved an amendment to Clause18 of the Finance Bill, 2018, sponsored by Minority Whip @JunetMohamed ,suspending the implementation of 16% VAT on fuel,which was to take effect on 1st Sept.2018, for a period of 2 years, citing the high cost of living
— National Assembly KE (@NAssemblyKE) August 29, 2018
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