Home General Rotich says 16% VAT to be reviewed after public uproar – Finance – Pulselive.co.ke

Rotich says 16% VAT to be reviewed after public uproar – Finance – Pulselive.co.ke

by kenya-tribune
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Kenya’s Treasury Secretary has given the strongest signal yet that the unpopular 16 per cent Value Added Tax on petroleum products might be dropped completely, at least for now following national public uproar since the levy was enforced on September 1.

While
speaking to reporters in Nairobi on Thursday, Henry Rotich said the 16 per cent
Value Added Tax on petroleum products will be reviewed “shortly” and his
ministry was in final stage of striking a deal with the National Assembly
following discussions which started last week.

“We are
looking at options of reviewing it and that discussion is at final stages. I
can’t give you any direction at the moment,”
Said Mr Rotich.

Since 1st
September when the 16 per cent levy on petroleum product came into effect, there
has been a countrywide uproar, with public transport players hitting passengers
with a 40 per cent raise on fares.


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Treasury house. (barakafm.)

 

The
imposition of the levy on petroleum products was initially suspended for three
years when the VAT Act 2013 was enforced, but MPs extend the grace period for
two years which expired on August 30.

Following
public outcry however, legislators unanimously voted to amend Finance Bill 2018
to defer the VAT levy on fuel for a further two years to September 2020.

Mr Rotich
did not, however, disclose if the discussion were around postponing it for
another two years or reducing it.

Review means exactly that: review.  We will
advise you as soon as that is concluded,”
he said.


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Since 1st September when the 16 per cent levy on petroleum product came into effect, there has been a countrywide uproar, with public transport players hitting passengers with a 40 per cent raise on fares. (CNN)

 

The 16
per cent Value Added Tax on petroleum products is a litmus test for President
Uhuru Kenyatta’s administration, with the government walking a tightrope
between keeping its commitments to international donors and caving into the
public interest.

Should the government bow to public pressure and suspend the
implementation the country risks being locked out of IMF’s precautionary credit.

IMF will then be at liberty to recall their outstanding
principals with could immediately trigger an economic meltdown in the country.


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President Uhuru Kenyatta. (The Standard)

 

Kenya’s reputation as a favorite investment destination in
the continent will also be badly damaged and seen as a ‘high-risk’ investor
destination.

As a result many experts have cautioned the government
against going the populist route.

Should the government choose to stand firm and continue with
the 16 per cent value-added tax (VAT) on petroleum products, while the country
stands to improve the state of its coffers and financial ratings, it risks
being unpopular in the public eye.

Talk
about ‘damned if you do and damned if you don’t’.



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