Kenya: Treasury in Crisis Meeting as MPs Vote on Tax Changes

The National Treasury yesterday held a crisis meeting following the move by the National Assembly to throw out a raft of tax proposals on essential commodities.

The Nation has reliably learnt that Treasury Cabinet Secretary Ukur Yatani was shocked by the decision of the lawmakers, which has forced him back to the drawing board on how to raise taxes to finance the Sh3.6 trillion budget.

The meeting, according to our source, took place at Mr Yatani's office at Treasury building from 11am and was attended by three members of the National Assembly committee on Finance and National Planning.

"The CS panicked over what transpired on the floor of the House on Tuesday as he wondered how he was going to raise the money to finance the budget," said an MP who attended the meeting but requested anonymity.

The CS tried to convince the MPs to persuade their colleagues to reverse the amendments made to the Finance Bill.

Details of the areas the CS proposed that taxes should be maintained remain scanty, but MPs maintained their ground, rejecting taxes on essential goods.

"For now, nobody can convince members that we need to introduce taxes on bread or unga. It just won't pass, at least not now," said the MP.

The National Assembly is set to make even more amendments to the Bill this afternoon, when members will either ratify or reject proposals contained in the report by the Gladys Wanga-led committee.

Several MPs want cooking gas to be zero rated, with the 16 per cent VAT that the CS Yatani is proposing scrapped. The lawmakers said if the country wants to successfully move to the use of green energy, then it should zero rate cooking gas so that more Kenyans can afford cooking with it.

Tax proposal

Dagoretti South MP John Kiarie said he would move an amendment to the Bill this afternoon to scrap the 16 VAT proposal.

"We need to ensure that Kenyans have access to cooking energy. I'm talking about people who stay in town who have no forest where they can go and get firewood," Mr Kiarie said.

Makueni MP Dan Maanzo said with very little forest cover in the country, cooking gas should be zero rated.

"This House should come together during the Third Reading and ensure that this country is with the rest of the world in terms of controlling pollution," Mr Maanzo said.

Should the tax proposal sail through today, Kenyans will have to pay about Sh350 more to fill a 13kg cylinder.

During the public participation of the Bill, the Petroleum Institute of East Africa petitioned MPs to postpone the 16 per cent VAT on cooking gas, but MPs rejected the move, saying it will affect revenue collection.

Yesterday, Parliament received a petition from Mr Charles Wanguhu seeking the help of the House to revoke or halt the implementation of the 16 per cent VAT on petroleum products to ease the burden on consumers. He also wants MPs to investigate the utilisation of the revenue raised through the Fuel Levy Fund with a view to ascertaining whether they properly utilised.

On betting, some MPs want the tax increased to between 40 and 50 per cent, as opposed to the 30 per cent proposed by the committee.

Faced with a Sh929 billion deficit, Mr Yatani will be crossing his fingers this afternoon that his proposals sail through.

It will, however, be difficult as MPs are keen to ensure they are on the public's side for political reasons.

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