Tax­man de­fends im­po­si­tion of 16 per cent VAT on fuel

Business Daily (Kenya) - - ECONOMY & POLITICS - Gal­gallo Fayo­tion­

Kenya Rev­enue Author­ity has de­fended the 16 per cent VAT on fuel, ar­gu­ing that Par­lia­ment passed the levy and it can­not be chal­lenged on grounds of be­ing op­pres­sive.

The tax was orig­i­nally in­cluded in a law passed in 2013, but was post­poned amid protests about its im­pact. The rev­enue author­ity fi­nally im­ple­mented the tax on Septem­ber 1.

Ac­tivist Okiya Om­tatah and Cotu had termed the tax op­pres­sive, adding that Par­lia­ment had voted to sus­pend the levy for a fur­ther two years.

“That a pro­vi­sion im­pos­ing tax can­not be said to be un­con­sti­tu­tional for rea­sons that the same is deemed op­pres­sive. In­deed in its very na­ture tax­a­tion is puni­tive,” said KRA, terming the pe­ti­tion op­pos­ing the tax as baseless, friv­o­lous and abuse of the court process.

The tax was part of a gov­ern­ment bid to fi­nance health, hous­ing and other pro­grammes, while nar­row­ing the fis­cal deficit to qual­ify for an ex­ten­sion of a standby credit fa­cil­ity with the In­ter­na­tional Mone­tary Fund.

The new tax has driven up pump prices and trig­gered a sup­pli­ers’ strike that caused fuel short­ages, which has eased in re­cent days.

In Nairobi, the price of petrol in­creased by Sh14.07 to Sh127.80 per litre, diesel in­creased by Sh12.34 to Sh115.08, while Kerosene used in most poor home­steads rose by Sh12.46 to Sh97.41.

KRA said it has tapped its power to im­pose the tax from the laws en­acted by Na­tional Assem­bly, ar­gu­ing that seek­ing to sus­pend the tax will see the court take over leg­is­la­ture and ex­ec­u­tive roles.

The High Court in Nairobi last week de­clined to sus­pend the tax, in­stead ask­ing the pe­ti­tion­ers to serve the Trea­sury, En­ergy Reg­u­la­tory Com­mis­sionkenya Rev­enue Author­ity and the At­tor­ney-gen­eral with their suit pa­pers and re­turn to court this week.

Yes­ter­day, the court set the hear­ing of the case filed in Nairobi for Septem­ber 17.

How­ever, Jus­tice Stephen Riechi, sit­ting in Bun­goma, is­sued tem­po­rary or­ders sus­pend­ing the law giv­ing hope of a tem­po­rary re­prieve to mo­torists and Kenyans which was short lived be­cause the Trea­sury re­jected the or­ders.

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