High Court in Bungoma issues temporary orders stopping the 16pc VAT on fuel, case filed by a group of youth to continue on September 12.
A group of youth in Bungoma sued Treasury CS Henry Rotich for effecting the new fuel levy.
Justice Stephen Riech issued the orders on Thursday.The case will continue on September 12.
MPs who passed a law on the additional taxes on fuel in 2013 now claim they were duped by the Government.
They said the Government then explained that the fuel prices would come down as Kenya was about to begin producing its own oil, which would stabilise the prices in the market. That is why they passed the VAT Act of 2013 that prescribed the 16 per cent tax on petroleum prices, but suspended its implementation by three years in anticipation of developments in oil exploration.
Kieni MP Kanini Kega (right), who was in Parliament in 2013, said they were misled. He said they would not allow Kenyans to suffer. “In 2013, we were informed that we would begin producing our own oil in Turkana and the economy would improve, as fuel prices would be low. This has not happened,” said Kega, who is also the chairman of the Trade Committee.
The government is between a rock and hard place over the implementation of the 16 per cent Value Added Tax on fuel.
On one hand it is grappling with public outrage over the tax while on the other it not only risks losing a Sh150 billion IMF loan facility but the Sh5.7 billion it expects to raise monthly from the tax too.
The IMF will be calling in less than 10 days with good or bad news on whether Kenya can access the loan aimed at cushioning our foreign exchange reserves.
The tax on fuel was one of the conditions for the country: to cut on borrowing and raise revenues locally.
On Monday, Equity Bank chief executive James Mwangi said the postponement of the levy as is being advocated by a section of politicians will only serve to widen Kenya’s revenue deficit by an extra Sh79 billion and inflate its public debt.