Treasury to implement the 16% VAT on fuel from Saturday

Treasury will forge ahead to implement the 16 percent Value Added Tax on fuel from Saturday despite public outcry about the levy.

Planning Principal Secretary Dr Julius Muia says though this will trigger higher cost of commodities, the government needs to raise cash for development projects.

Treasury has come under sharp focus due to the impending introduction of Value Added Tax on fuel that was first mooted in 2013.

However, the national treasury deferred the implementation to September 2016 then to this September in a move expected to help the taxman raise close to 100 billion shillings in the 2018/19 fiscal year.

With four days to go, treasury appears to be all set to start charging a 16 percent VAT of diesel and Petrol—ups—Planning Principal Secretary Dr. Julius Muia has urged the public to tighten their belt as Kenya seeks resources to close a huge budget deficit and fund various capital projects.

The push to tax fuel is being driven by the International Monetary Fund to nudge Kenya to lower its 550 billion shillings budget deficit to around 6 percent.—ups—KEPSA and the Kenya Association of Manufacturers are among lobby groups opposed to taxing petroleum products saying this will raise the cost of production which will in turn be pushed to consumers.

Already transporters have warned the public to prepare for increased transport cost if the planned VAT is implemented. Legislators have also raised concerns with treasury hinting at amending the Finance Act to exempt essential goods—ups—Treasury is also drafting a monitoring and evaluation policy tool that will help in tracking implementation of various projects in the country.



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