NSE Energy Petroleum Sector

Members of Parliament face a tricky test today as they debate President Uhuru Kenyatta’s memorandum which proposes introduction of 8% VAT on petroleum products down from the earlier 16%.

The president in his memorandum to parliament on Tuesday detailed reasons on why he declined to assent to the Finance Bill 2018 which would have delayed the effecting of the tax by a further two years and made recommendations on how to raise revenue to plug the Ksh530 billion deficit.

Besides the 8% VAT on petroleum products which will raise Ksh17.5 billion per year, President Kenyatta also proposed an Ksh18 tax on Kerosene which according to him, in the recent past has been used to adulterate diesel.

With the introduction of the tax, the price of paraffin will retail between Ksh114 and Ksh127.

Uhuru also proposed a 20% tax on mobile money transaction services as well as a 15% levy on airtime and data services.

Gamblers were not spared either as the president proposed a 15% tax on betting firms and 20% tax on prize money awarded to winners of bets, lotteries and gaming.

Employees will also shoulder a further burden as President Kenyatta proposed a 1.5% tax of their basic salary as remittance to the National Housing Development Fund to cater for the low cost housing project with their employers also expected to make a similar remittance before the 9th day of each month.

The introduction of this levy means that employees could cough up Ksh5,000 as the president seeks to secure his legacy, housing is one of his pillars in his Big Four Agenda.

Account holders will also have to cough up more as the president proposed an introduction of a 20% tax on ATM and teller withdrawals.A 10% increase.

A number of MPs in the past week have unapologetically said that they will shoot down the President’s recommendations.

On Tuesday, Bungoma Senator Moses Wetangul’a distanced himself from an announcement made by a section of National Super Alliance (NASA) backing the 8% VAT with a set of conditions.

The self-styled incumbent opposition leader took to twitter to make his stance known effectively being at opposite sides of the argument with coalition leader Raila Odinga who had earlier whipped his MPs into backing the VAT.

“There has been no agreed coalition position on the VAT saga. Our opposition to imposition of a further tax load remains intact. The ODM leader’s statement is personal and does not in any way represent NASA. NASA MPs are advised to play their opposition role,” said Wetangula amid public outrage over the matter.

Mr. Odinga’s son Raila Odinga Jr.who is also against the introduction of the VAT urged his MP to shoot down the presidents recommendations.

“Unfortunately as a Kenyan citizen, I am unconvinced by the statement put out by NASA on the VAT on fuel, none of the conditions they have put up are measurable and even if they were, they are nowhere near closing the deficit on the debt. I call for my MP @okothkenneth to reject,” the opposition leader’s son tweeted.

Mr. Wetangula’s sentiments were backed by Rarieda MP Otiende Amollo, an ODM MP who said, “Good people, many have asked if my stand on VAT has changed, NO it hasn’t. I will vote against imposition of 8% on petroleum products. I believe that to be right, then we engage on what else needs to go, including CDF, CASs, NYS, Big 4,”

Embakasi East MP Babu Owino said, “Kenyans first!” a similar position to Nyali MP Mohammed Ali who said, “My stand on the current VAT on fuel products debate is that we will continue standing and speaking for the already opressed mwananchi. Zero VAT is our stand,”

However not all MPs oppose the recommendations; Gatundu South MP Moses Kuria in an interview last week said the introduced measures are necessary if Kenya is to achieve its developmental goals.

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