Kenya: DP Ruto Hints At Review of Hefty Fuel Tax As Public Anger Escalates

A motorist refuels.
3 September 2018

Deputy President William Ruto was yesterday coy about the adverse implication of the increased fuel price on Kenyans, vaguely saying the Executive would work with Parliament to resolve the crisis that is expected to degenerate in the coming weeks after motorists and workers threatened to down tools.

Mr Ruto, while reacting to the effects of the new law -- VAT Act of 2013 -- starting September 1 this year, issued a statement saying a balance would be created so as not to burden Kenyans. The law has increased the prices of fuel products in the country.

Mr Ruto spoke on the day Nasa leader Musalia Mudavadi and a section of the coalition's MPs gave the government three days to remedy the already dire situation or they would mobilise Kenyans to protest the increase in fuel prices.

Nasa MPs Anthony Oluoch (Mathare), Mark Nyamita (Uriri) and Caleb Amisi (Saboti), who spoke after a church service in Mathare, Nairobi, also threatened to move "Removal from office" proceedings against National Treasury Cabinet Secretary Henry Rotich if he fails to suspend the law.

RAISED CONCERN

Baringo Senator Gideon Moi also raised concern over the hefty tax, saying it would push the cost of living higher in an already harsh economy. "Though the government needs the money to fund development projects, the ripple effect of the tax is far and wide -- including high cost of living, rising inflation, loss of jobs and slow growth of the economy," said Senator Moi in a statement to newsrooms.

Mr Moi, who is also the Kanu chairman, added: "It is prudent for the government and all other relevant agencies to explore other ways of raising revenue other than implementing this tax".

He said the fuel tax will condemn the majority of Kenyans to poverty as they will be have to dig deeper into their pockets to buy basic goods.

Kenya Association of Manufacturers head of policy, research and advocacy Job Wanjohi also opposed the VAT law, saying it would unnecessarily increase the cost of doing business, thereby affecting the country's balance of trade with its partners.

On Thursday, the National Assembly passed the Finance Bill 2018 that essentially delayed until 2020 the implementation of the "punitive law", which nonetheless came into force on September 1.

PUBLIC OUTCRY

The law was to take effect in 2013 but, owing to sustained public outcry, it was deferred to 2016 and then to 2018.

But the move by Mr Rotich to direct Kenya Revenue Authority (KRA) and Energy Regulatory Commission (ERC) to effect the law that saw fuel prices shoot up on September 1, 2018, has angered the majority of poor Kenyans.

"The Executive will be meeting Parliament to address the concerns raised. A solution will be reached," Mr Ruto said, adding that the intended solution will not slam the brakes on the government's multibillion development plans.

The DP spoke on Sunday during a prayer service at Good Shepherd Catholic Church in North Horr, Marsabit County.

National Assembly Leader of Majority Aden Duale said that unless the President signs the Finance Bill, the 2013 law shall apply. "The horse has already bolted. Kenyans have no choice but to pay VAT on petroleum products. They can only appeal to the President to sign the Finance Bill into law," Mr Duale said.

IMPACT NEGATIVELY

President Uhuru Kenyatta is currently on a state visit to China. Kenyans are looking up to the leadership of the country to mitigate the situation, which they fear will impact negatively on Jubilee's Big Four agenda. Until a solution is found, Kenyans will have to pay through their noses to fund the ambitious Sh3.074 trillion budget.

Even as Mr Ruto spoke, Mr Mudavadi told President Kenyatta that there were no two ways about respecting the decision of the National Assembly and signing into law the Finance Bill.

"Application of this "punitive law" depicts a government that has gone rogue. Despite warnings against reckless borrowing since 2013, the government has played deaf and sunk the country into a Sh5.1 trillion debt, whose use is shrouded in secrecy and whose impact is glamorous projects with no immediate comfort to Kenyans," Mr Mudavadi said.

The Nasa leader said imposition of the VAT law on petroleum products is a lazy recourse to a law that has been suspended twice. He said the Treasury relied on the rollover of the 2013 law rather than on a reasoned and justified imposition of VAT based on the current economic status of the country.

PLAYING HOAX

"Treasury has, therefore, no justifiable economic reason for the increase, other than playing hoax after being bullied by multinational banks," he said, adding "at no time should the government be dictated by a wrong sense of entitlement."

According to Mr Mudavadi, Mr Kenyatta should urgently save the country from turmoil: "This magnanimous act will arrest the growing disaffection with the government's appetite to fleece Kenyans through frivolous taxes." The indebtedness that the Jubilee government has sunk the country into is alarming, with every living Kenyan owing donors about Sh120,000. This comes as pilferage of public resources continues. Just recently, the cost of electricity also increased considerably.

Mr Oluoch said he would marshal MPs to begin the process of removing Mr Rotich from office if the situation continues. "People are already overburdened and we cannot afford to levy them more. Parliament has already spoken on this. Why Mr Rotich is not listening, I do not know. If he doesn't listen to the voice of the representatives of the people, we are coming for you," Mr Oluoch said. He added: "You can't look for money without us (MPs) giving you the legal instruments to collect it."

HIGH COST OF PRODUCTION

Mr Nyamita added; "You can't succeed when the cost of production is already too high. If the situation stands, the Big Four Agenda will remain a pipe dream."

"I will table a Motion in Parliament to impeach Mr Rotich for his blatant failure to implement the recommendations of the House, which reversed the planned increase of fuel prices," Matungulu MP Stephen Mule said yesterday at St Mary's Catholic Church in Tala, Machakos.

Mr Mudavadi said the government stands condemned for its anti-poor economic policies that have resulted in Kenyans' indebtedness and high cost of living -- pushing the poor into extreme poverty. "Mr President, burdensome taxes translate into intransigence and impunity by the government. Your fiscal policies are killing the goose that lays the golden egg," said the Nasa leader. He said many Kenyans are living at the mercy of shylocks and banks, with many small businesses facing closure due to a stagnant economy.

Additional reporting by Wycliff Kipsang

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