Kenyans have a sigh of relief after MPs voted to suspend the controversial 16 per cent petroleum levy for two more years, which will now take effect on September 1, 2020.
The amendment on the Finance Bill was tabled by Minority Whip Junet Mohammed who cited high cost of living in Kenya.
“The House has this afternoon approved an amendment to Clause 18 of the Finance Bill, 2018, sponsored by Minority Whip Junet Mohammed, 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,” read a statement from Parliament
National Assembly Minority Leader John Mbadi said the implementation of the 16 percent VAT should be shelved forever.
“We need to postpone the tax for another two years but the House need to decide after this to do away with the tax altogether,” said Mbadi.
Treasury had planed to implement a 16 per cent value-added tax (VAT) on petroleum products from September 1, which would see fuel prices increase by up to Ksh17 per litre.
In the new plan, petrol prices would have shot to more than Ksh131.93 in Nairobi, while diesel and kerosene would have rose from the current Ksh102.74, and Kshh84.95 per litre, to highs of Ksh119.38, and Ksh98.54, respectively.
Matatu operators had confirmed that fares would increase by at least Ksh30 from September 1, if the 16 per cent fuel levy came into effect after they failed to strike a deal with the government.
“The fuel prices are already too high and the 16 per cent is unnecessary. The ERC (Energy Regulatory Commission) have been increasing prices every month since the election. Whenever the government wants to raise money, fuel becomes their easier target,” Kenya Motorists Association chairman Peter Murima said.
The Kenya Private Sector Alliance (Kepsa) had already warned that the planned huge price change will increase inflation by as high as four per cent.
Being the main input in the energy-intensive sectors, the Kepsa said, the projected rise in pump prices would result in an increase in the cost of production and manufacturing of commodities by both small and big businesses, an increase in the cost of transport and an increase in the cost of household consumption of goods and services.
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