ECONOMY

Blow to government as High Court suspends tax on fuel

Treasury Cabinet Secretary Henry Rotich will have to look for alternative means to plug the government’s budget deficit after the High Court suspended the 16% tax on petroleum products on September 6.

The orders were issued by Justice Stephen Riech sitting in Bungoma.

“In the presence of Ken Amondi, advocate for the petitioners and in the absence of the advocate for the respondents. It is hereby ordered that conservatory orders be granted quashing the decision by the Kenya Revenue Authority and the Energy Regulatory Commission from implementing the Finance Act 2013 to enable the president to either assent to or reject the bill,” ruled Justice Riech.

CS Rotich had been sued by Bungoma youth over failure to suspend the tax despite parliament recommendations.

The case will be mentioned on September 12.

This comes shortly after a crisis meeting earlier on the same day between CS Rotich and the parliamentary leadership failed to find a solution to the fuel crisis.

The meeting which reportedly lasted two hours was necessitated by the public’s call for the suspension of tax.

Leaders who were in attendance at the crisis meeting include CS Rotich, National Assembly speaker Justin Muturi, Budget and Appropriations Committee chairperson Kimani Ichungwa, National Assembly Clerk Micheal Sialai and Attorney General Kihara Kariuki.

The crisis has been precipitated by the effecting of the Finance Bill 2013 on September 1, after Rotich rejected parliament’s ammendments that sought to defer the effecting of the bill to September 2020.

Consequently, Kenyans across the country woke up to dry pumps leaving them stranded and as a result inconveniencing their businesses with most gas stations only selling fuel to Public Service Vehicles (PSVs).

Even the PSVs had to scramble for the now rare commodity.

On September 3, independent petroleum suppliers dowed their tools following the effecting of the tax which has led motorists to charge more for fare.

“This is in solidarity with all the other Kenyans against the government’s decision. The strike is indefinite until the decision is reversed,” Joseph Karanja, chairman of the Kenya Independent Petroleum Dealers Association said.

Attempts by Petroleum Principal Secretary Andrew Kamau to quell the protests staged by the distributors outside the Industrial Area depot turned into a shouting match on September 6 forcing Mr. Kamau to leave.

The move by the distributors to down the tools has led to shortage of petrol across the country forcing the Energy Regulatory Commission to engage the police to ensure resumption of distribution.

The distributors had barricaded the roads to prevent distribution of the commodity to petrol stations.

The row between the government and the distributors led to the cancellation of the operating licence of Kipeda Holdings Limited which the government accused of being behind the strike and economic sabotage.