184 MPs vote to double VAT on petroleum to 16%

Kenyans are staring at costly fuel after the Finance Bill 2023 clause proposing an increase of Value Added Tax (VAT) on petroleum products from 8 to 16 per cent sailed through.

The proposal was retained when members of parliament voted on the amendment during the Third Reading of the Bill on Wednesday evening.

A total of 184 MPs vote in favour of the proposal with 88 others opposing the increment.

The contentious clause elicited a heated debate in the House as MPs allied to the Kenya Kwanza government faced off with their counterparts from the opposition's Azimio la Umoja - One Kenya coalition.

Minority Leader Opiyo Wandayi told the House that the proposal seeking to double VAT on petroleum was punitive.

The firebrand legislator warned that passing the Bill as it is would be the beginning of the fall of President William Ruto's regime.

"If by any chance this clause becomes part of the bill and the VAT on fuel is increased to 16%, this will be the saddest day in the history of this country. If by any chance this Finance Bill is passed and it becomes an act of Parliament, that will mark the beginning of the fall of this regime," Wandayi warned.

However, Majority Leader Kimani Ichung'wah defended the decision to double tax on petroleum, saying Kenya's neighbours like Uganda charge more.

"VAT on fuel in Kenya, even at 16 per cent, is still the lowest with Uganda at 18 per cent," Ichung'wah said.

Minority Whip Junet Mohamed accused the Kikuyu MP of misleading the House, arguing that fuel is cheaper in Uganda and Tanzania compared to Kenya.

"Is it in order for the Majority Leader to mislead the House that the rate of VAT on fuel in Uganda and Tanzania is higher than in Kenya when he knows very well that fuel is cheaper in Uganda and Tanzania by far Ichung’wah," Mohamed fired at Ingung'wah.

Ichung'ah attributed the low fuel prices in the neighbouring countries to subsidies.

"Fuel could be cheaper in Uganda and Tanzania, but look at the interventions there that include subsidies," Ichung'awah responded.

The Finance Bill seeks to raise additional revenue in taxes in the region of Ksh130 billion to finance the Kenya Kwanza administration’s Ksh3.6 trillion budget for the 2023/24 financial year.