Tougher Times For Kenyans

After a contentious debate in which Azimio and Kenya Kwanza MPs sparred in the House, 184 lawmakers voted to raise the VAT to 16% against 84 who abstained, paving the way for a potential hike in fuel prices of more than Ksh.10, and tougher times for Kenyans ahead.
The majority of the Azimio opposition coalition MPs opposed raising the fuel tax to 16%, arguing that doing so would raise living expenses.
The Finance Bill 2023‘s clause on increasing the VAT on gasoline was removed after an amendment was filed by Kitui Central MP Makali Mulu. He made the case that whenever the VAT on fuel is raised, the expenses of transportation, manufacturing, production, and electricity also go up.
Junet Mohamed, the minority whip, called the VAT increase clause the “most offensive” to Kenyans and warned that it would herald a revolution there.
“This is the bill’s most repulsive provision. The cost of living in Kenya would skyrocket when the VAT is raised from 8 to 16%,” according to Junet.
He continued by claiming that the Kenya Kwanza government had duped Kenyans by pledging to lower taxes in order to lower fuel prices.
“Kenya Kwanza said that taxes are the cause of the fuel shortage. They pledged to research taxation. They are now advising us to raise fuel taxes in the open this afternoon. What a contradiction. Let’s all agree that the VAT on fuel must be removed; otherwise, if this measure is approved, there will be a revolution in this nation.” Junet added.
Opiyo Wandayi, the minority leader, vehemently disagreed with the idea and declared that any move to raise petrol prices would be the saddest day in Kenyan history.
“The worst day in the history of this nation will occur if this clause is included in the Bill and the VAT on fuel is raised to 16%. This proposed increase in the VAT on petrol, is the one thing that will have the most impact on the average person and raise the cost of living overall.” according to Wandayi.
If there was one thing the government could have done to protect and avoid tougher times for Kenyans ahead, is from rising fuel prices.
Kuria Kimani, the chairperson of the National Assembly Finance and Planning Committee, argued that the VAT on fuel should be raised to bring it into line with other taxable goods and services, but Wandayi reject”The requirement to apply the same VAT rate to all goods and services is not mandated by the law in any way. VAT rates are subject to change and have in the past, continued Wandayi.
Though she was elected as a member of the UDA Party, the Githunguri MP Gathoni Wamuchomba reaffirmed her stance that she would oppose any legislation that would burden Kenyans.
“Life is so miserable, as we tell our citizens. Since fuel serves as a catalyst for everything from production to marketing to the wellbeing of our population, we cannot afford to add more taxes to the price of fuel. If we increase fuel taxes, our people will continue to suffer, and production—particularly in rural areas—would cease entirely,” said Wamuchomba.
“Increasing fuel taxes leads to tougher times for Kenyans and it’s not the answer if you want to revitalize the economy of this nation. The solution is empowering our farmers who produce crops that bring donors to this country,” she said before declaring her vote as No.
Ndindi Nyoro, chair of the budget and appropriations committee, dismissed attempts by the minority side to oppose the proposal to raise the VAT on fuel, instead challenging them to offer other alternatives to raise revenue.
“We have set aside Ksh. 25 billion from the 2023–24 budget for the fuel subsidy that was promised but never paid. Roads have also been given Ksh. 250 billion.
“Those who might disagree with the amendment proposed by the chair should provide other funding sources. It is impossible to have your cake and eat it,” declared Nyoro.
The majority leader, Kimani Ichung’wah, acknowledged that Kenya’s fuel costs will rise as a result of a hike in VAT but insisted that the country’s VAT would still be lower than that of its neighbors.
“It is accurate to say that an 8% increase in VAT will result in an increase in fuel prices. But even with a 16% VAT rate, Kenya still has the lowest VAT in the region where it dominates the market. “Our friends in Tanzania and Rwanda are at 18% on fuel, and Uganda is at 18%,” he remarked.
The Finance Bill, 2023, which is currently in the Committee of the Whole House stage before it is passed into law, is the subject of various proposed amendments that the National Assembly is currently debating.