Finance Bill 2018 review: VAT on fuel, airtime, mobile money

President Uhuru Kenyatta. [Photo: Courtesy]

In September 13, President Uhuru Kenyatta rejected the Finance Bill 2018.Speaker Justin Muturi had been accused by Suba MP John Mbadi of delaying to present the bill.

"It is unfortunate that despite Parliament approving the Finance bill 2018, the same has not been forwarded to the speaker" said Mbadi.
The VAT imposed by the National Treasury on September 1, resulted to a countrywide drastic fuel price hike.

The punitive VAT was triggered by International Monetary Fund's (IMF's) recommendation that would see Kenya position itself for future advanced development loans.

In a gazette notice, the speaker summoned the MPs for a special sitting on the following week. The notice read, "the special sittings of the Assembly shall deal with the message of the president in respect of his reservations to the Finance Bill 2018."

The cost of living would likely go up despite President Uhuru Kenyatta’s decision to reduce the punitive fuel tax by half from 16 percent to eight percent but Members of Parliament proposed it to be reduced to zero percent and seek alternative avenues of raising revenue to finance its activities.

Sending money via mobile money transfer service was expected to be expensive should the MPs pass the sweeping tax proposals by the President.

Also, charges on withdrawing cash from an ATM, transferring money from your bank account into your mobile money wallet or just depositing a banker’s cheque for your child’s school fees was to rise.

Too, time spent on Facebook, Whatsapp or Twitter was to attract tax as the cost of Internet bundles was expected to go up.

Uhuru’s increased tax on kerosene, could make cooking and lighting for millions of poor rural folk an expensive affair.

Sweets and chocolates had not been spared, as the Government moved to plug a Sh600 billion budget hole.

The radical proposals were introduced after the President halved the controversial 16 per cent fuel levy to calm growing public outrage.

The President also cut spending on key development projects.

In September 20, President Uhuru Kenyatta signed the Finance Bill 2018 into law drawing an uproar from Kenyans.

In September27, Parliament passed 2018 Finance Act that saw President Uhuru reduce the petroleum product tax by half.

Parliament In its reply to activist Okiya Omtatah’s case urged the High Court to dismiss a case challenging the legality of new taxes introduced in the Finance Act 2018.

Through lawyer Wangechi Thanji, Parliament argued that by passing the recommendations made by President Uhuru Kenyatta, it had saved Kenyans from paying excessive taxes.

“If orders are issued against the Finance Act, 2018, the country will revert to the Value Added Tax of 2013 in addition to the other Acts of Parliament that were amended by the Finance Act of 2018. That includes VAT on petroleum products at 16 per cent,” Ms Thanji argued.

The passing of Finance Bill 2018 into law saw an increase in price of many products in the country.