Ruto’s proposal to reinstate the 16 percent fuel tax exposes his doublespeak
3 min read
Ruto proposes to reinstatement of the 16 percent value-added tax on fuel as of July according to National Treasury documents
Ruto proposes to reinstatement of the 16 percent value-added tax on fuel as of July according to National Treasury documents.
In the midst of an impending storm, President William Ruto’s intention to reintroduce the 16% value-added tax on petroleum items has exposed his double speak.
The National Treasury has proposed that from July 1, the VAT pricing on petroleum products will go up from the current 8 percent enacted during the tenure of retired President Uhuru Kenyatta.
But throughout his campaigns, President Ruto pledged to reduce Kenyans’ high tax burden, which he claimed was behind the country’s high cost of living.
The fresh tax bid is expected to trigger a massive political storm when the Finance Bill, 2023 will be up for approval by parliament with Raila Odinga’s led opposition promising fireworks.
The move by Ruto’s Kenya Kwanza administration could evoke memories of a parliamentary battle in 2018 and 2021 when Uhuru vetoed MPs’push to defer 16 percent VAT tax for two years.
Uhuru had gone ahead to slash the tax to eight percent and returned that to Parliament with a memorandum, arguing that the government was in dire need of more resources.
MPs had to decide whether to postpone or permit the implementation of a transitional provision that had expired and had exempted petroleum goods from the VAT for two years.
After MPs were unable to muster the two-thirds majority needed to reverse a presidential memorandum, Uhuru’s plan to reduce the levy to eight percent was approved.
Only 215 MPs attended the chaotic session, which was disrupted by yelling and intermittent suspensions after parliamentarians opposed to Uhuru’s initiative caused trouble.
It is telling that when Ruto was Deputy President, his close allies were leading the resistance to the President’s initiative.
They included Kikuyu MP Kimani Ichung’wah (current majority leader) and Kiharu MP Ndindi Nyoro(current chairperson of the budget committee).
“Mine would be to ask the National Treasury to reconsider that provision or defer its implementation to allow….commercial production of oil. When the prices come down, we can charge VAT on petroleum fuel,” Ichung’wah said then.
Arguing that the 16 percent VAT was envisaged upon the country embarking on commercial oil production, Nyoro said then: “We cannot afford to burden the people by imposing VAT on oil products.”
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The two will be tasked by Ruto to champion for the Finance Bill, 2023, which they vehemently opposed in 2021.
In 2021, they vehemently opposed the tax after the matter resurfaced in the House during deliberations on the finance law to address increases in the prices of petroleum products.
“We must begin by asking ourselves as a House whether it is not time to amend the constitution that gives the President the powers to legislate through the backdoor..so that on matters that touch on the people that we represent, the president cannot impose his will,” Ichung’wah said then.
Then Majority leader Aden Duale argued that the house had rejected a bid to raise VAT on petroleum products, “but the president used his powers to under Article 115.”
“This house must rise to the occasion. We must bring a Bill. The President cannot use Article 115 to harass Kenyans. The whole thing is about IMF who said we must charge VAT. We must reduce the sh78 taxation on a litre of petrol and other levies,” he said then.
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