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Shame as 269 MPs skip debate on fuel tax cuts
MPs last evening adopted a report on tax cuts to reduce the cost of fuel, paving the way for consideration of a Bill to implement the recommendations to ease the burden on consumers.
However, despite the immense public interest on the matter, there were only 80 MPs — 22.9 per cent of the 349-member House — when debate opened on the report by the Finance and Planning committee, casting doubt on priorities of the vast majority, who skipped the session in the National Assembly.
A number of MPs accompanied Deputy President William Ruto and ODM leader Raila Odinga in rallies at the Coast and Rift Valley, respectively.
Taxes and levies
The MPs who attended the rally with Raila in Turkana were Jeremiah Lomorukai (Loima), Kanini Kega (Kieni), Junet Mohamed (Suna East), Raphael Wanjala (Budalang’i) and Stanley Muthama (Lamu West).
Those who accompanied the DP in his Coast tour were Lydia Haika (Taita Taveta Woman Rep), Khatib Mwashetani (Lunga Lunga), Benjamin Tayari (Kinango) and Aisha Jumwa (Malindi).
Rose Museo (Makueni Woman Rep) and Joshua Kimilu (Kaiti) were at Nguu/Masumba Ward by election in Makueni.
In the National Assembly, Finance Committee Chairperson Gladys Wanga opened debate on the report, which observed that, taxes and levies account for about 40 per cent of the pricing of petroleum products.
In the 2020/21 financial year, Kenya Revenue Authority raised a total of Sh232 billion through the eight different taxes that have largely contributed to the runaway prices of fuel.
The taxes are the highest in the region, which explains why fuel in neighbouring countries is cheaper.
Yesterday, Ms Wanga said, in considering the petitions on the high fuel prices, the team balanced the interests of both the State and the public.
“When fuel prices rose, everybody took it to the doorstep of Parliament, saying, it’s MPs who should make legislation to make the prices come down. We took that step as a House,” Ms Wanga said.
Minority Leader John Mbadi castigated former Majority leader Aden Duale, saying that in 2018, the Garissa Township MP was at the forefront pushing for the eight per cent VAT on fuel, which the report proposes to be reduced by half.
While backing the proposal to reduce the VAT from eight to four per cent, Mr Mbadi, however, opposed calls to zero-rate petroleum products.
Leads to high prices
“We need taxes in this country to develop; let us not play populist politics. I still believe we need taxes on petroleum products but if it leads to high prices, which affects the common man, then we can review it,” he said.
Mr Duale, who was ousted as Majority leader during a purge on DP Ruto allies, said the committee ought to have zero-rated petroleum.
“This House expected the committee to be bold and totally remove VAT from petroleum products and LPG. When the Bill comes for debate, we will remove the VAT on petroleum products like is the case in Uganda, Ethiopia and Tanzania,” Mr Duale said.
The Garissa Township MP also protested the move by the committee to reduce gross margins of Oil Marketing Companies (OMCs) by Sh3 from the current Sh12 to Sh9, terming the move as punitive.
“The committee is very punitive to businessmen who work very hard and employ thousands of Kenyans. This committee cannot convince the House that the recommendation is one of the issues affecting fuel prices,” Mr Duale said.
Mvita MP Abdulswamad Nassir recalled that in 2018, when the Minority side wanted to zero-rate fuel, they were fought by the government side led by Mr Duale.
Recalling the motion by Junet Mohamed, which he seconded, Mr Nassir told the House how “we were bitterly fought”. He added: “Those who wanted fuel prices to go higher in this country are known and I don’t want to mention names.”
He also questioned the usage of Sh18 billion collected from Petroleum Development Levy (PDL) that was meant to cushion Kenyans through the stabilisation of prices.
The MP said he will seek answers on how much of the Sh18 billion was actually used to repay the Standard Gauge Railway loan.
Kiminini MP Chris Wamalwa said PDL should have been reduced to Sh0.40 and not Sh2.9 as proposed by the committee. He argued that a lot of the money goes to waste as previously reported by the Auditor-General.
“We must understand where the Sh18 billion meant for stabilisation has gone. The CS responsible must be asked to account for this money,” Dr Wamalwa said.
The law guiding the PDL demands that it supports a subsidy when fuel prices skyrocket as well as financing infrastructure upgrades in the energy and petroleum sectors.
The committee said the Treasury abused the Fund by diverting the cash to repay SGR loan.
Kitui Central MP Makali Mulu also defended oil dealers, saying, they employ locals and should benefit from tax exemptions.
“As we look at the Bill, we need to ensure that the petrol stations owned by the locals benefit,” he said, adding, “We need to treat them well.”
President Kenyatta’s name was also dragged into yesterday’s debate.
Kikuyu MP Kimani Ichung’wah and his Kiharu counterpart Ndindi Nyoro accused him of imposing the eight per cent VAT through his memorandum to the House in 2018.
“During the debate on the Bill, we will move amendments to zero-rate both the VAT on fuel and LPG. We are not saying people should not be taxed but we should be cognisant of the hard times people are living in.
“Perhaps we need to defer the VAT on the products up to 2024,” Mr Ichung’wah said.
He castigated the committee for trying to control the profit margin of OMCs, saying, it’s akin to state capture of the companies.
The House will now consider the Petroleum Products’ (Taxes and Levies) (Amendment) Bill, 2021 next week in order to implement the tax reductions.
Yesterday, consumers were handed a relief after the energy regulator reduced fuel prices following the reinstatement of the fuel subsidy.
The Energy and Petroleum Regulatory Authority (Epra) reduced the price of petrol and diesel by Sh5 per litre and that of kerosene by Sh7.28.
This means motorists in Nairobi will from midnight now pay Sh129.72 for petrol, Sh110.6 for diesel and Sh103.54 for kerosene, down from Sh134.72, Sh115.6 and Sh110.82 for the three commodities respectively.
“The maximum allowed petroleum pump prices in Nairobi for super petrol and diesel decrease by Sh5 per litre while that of kerosene decreases by Sh7.28 per litre,” Epra said in a statement.
“The prices are inclusive of the eight per cent Value Added Tax (VAT) in line with the provisions of the Finance Act, 2018, the Tax Laws (Amendment) Act, 2020 and the revised rates for excise duty adjusted for inflation as per Legal Notice No. 194 of 2020,” the regulator said.
The new prices will see motorists in Mombasa pay Sh127.46 per litre of petrol, Sh108.36 for diesel and Sh101.29 while those in Kisumu will pay Sh130.12, Sh111.3 and Sh104.26 for petrol, diesel and kerosene respectively.
Meanwhile, those in Nakuru will part with Sh129.24 for petrol, Sh110.43 for diesel and Sh103.39 for kerosene, while those in Eldoret will pay Sh130.13, Sh111.32 and Sh104.27 for the three products respectively.
The lower prices come following reinstatement of the fuel subsidy that had kept fuel prices stable from April before being lifted last month, pushing fuel prices to a historic high.
Epra has cut the oil marketers’ margin to Sh6.26 for petrol from Sh12.39 per litre last month, Sh5.5 for diesel from Sh12.36 and Sh7.73 from Sh12.36 for kerosene last month.
The fuel suppliers will be reimbursed from the Petroleum Development Levy Fund, which is funded by PDL that was raised to Sh5.40 per litre of petrol and diesel last year from Sh0.40.
The price fall also eases pressure on the government to lower the high fuel prices, which saw top government officials hint at a cut in the prices during yesterday’s review.
“In the coming days, you will notice significant changes in the cost of fuel. We are also targeting significant changes in the cost of power.
“We’re streamlining and bringing about greater efficiency in the manner these organisations work,” said Interior Cabinet Secretary Fred Matiang’i on Wednesday.
But this comes at a time MPs have proposed a raft of new changes on taxes and levies charged on fuel that will see the cost of the product significantly come down if they are adopted.
Additional reporting by Brian Ambani
