The treasury’s move to implement the 16 per cent VAT on petroleum products has been by defended by the Kenya Revenue Authority.
This comes after activist Okiya Omtatah and Central Organisations of Trade Unions (COTU), had filed a petition in court to challenge the imposition of the tax which was implemented on September 1, 2018.
Omtatah had initially argued that enforcement of the VAT tax had been done contrary to the National Assembly’s decision to postpone the bill to 2020. This according to Omtatah was constitutionally irregular.
In addition, Mr Omtatah argued that an increase in prices of petroleum products used both domestically and industrially would lead to inflation of other commodities in the market. COTU on the other hand, argued that ordinary citizens might not recover the revenue already collected.
In response to the appeal, through lawyer Kennedy Kirugi, KRA asserted that the Constitution allows the national government powers to impose income tax, VAT and other levies on imports and exports.
In a document presented before the court on Monday, KRA termed the petition against the tax as unfounded and without merit and as such it should be dismissed in its entirety.
The implementation of the tax had been suspended by Bungoma High Court Last Week but the courts decree was rejected by the treasury with petroleum prices remaining unchanged in all parts of the country. Following the hearing, the petitions were pushed to September 17, 2018.
The implementation of the tax; which has been negatively received by Kenyans across the country, was prompted by the government’s requirement for an extension of standby credit facility with the International Monetary Fund (IMF).
The new tax inevitably provoked a boycott by petroleum product suppliers after the price of petrol, kerosene and diesel per litre all increased. The boycott later resulted in fuel shortages across the nation that was most felt by average Kenyans.
Kenyans have since called on President Uhuru Kenyatta to assent to the Finance Bill 2018, passed by parliament earlier this month to suspend the implemented tax. The tax was initially factored in the Finance Act, 2013 but it was delayed for three years and another two years, which came to an end last month.