On Wednesday, there were fireworks in Parliament as lawmakers discussed the idea of imposing a 16% value-added tax on petrol.
With the exception of Githunguri MP Gathoni Wamuchomba, at least 184 MPs, many of whom were from Kenya Kwanza, backed the measure, while 88 MPs, many of whom were from Azimio, rejected the change.
With the approval of the referendum and using the present pricing as a baseline, gasoline, diesel, and kerosene would all be sold for Sh196 per litre starting on July 1.
Azimio saw President William Ruto and his men reversing a position they had taken during the campaign.
They said that Kenya Kwanza had broken its pledge to one of its most important constituencies, the hustlers.
A revolution in the nation could result from the VAT on fuel, warned Raila's army and those who supported their position.
However, Kenya Kwanza MPs strongly backed the proposal to raise the VAT on petrol, in contrast to their opponents in the opposition, who opposed it.
Francis Kuria Kimani, the chairman of the finance committee, stated that the additional 8% was added to balance the deficit on the side of the dealers.
According to his analysis, dealers were investing in fuel at a rate of 16 percent while Kenyans were currently paying 8% for it.
The dealers, according to Kimani, had to delve deep into their pockets to make up the shortfall as a result, he claimed.
“This eight per cent that you have been subsidising by charging VAT on fuel at eight per cent and for all other supplies at 16 per cent,” he said.
Kimani added, “It means it is taxpayers' money that was paying the eight per cent and this is what this proposal is curing.”
His suggestion, according to Kikuyu MP and majority leader Kimani Ichung'wah, was intended to address the inequities in VAT claims.
“The problem that we have with VAT claims on input tax is because of these varying interest claims, and that is the fact that you cannot dispute,” he said.
Chuka Igambangombe MP Patrick Ntwiga said, “I've heard our friends shout to the Speaker every day here 'No CDF, No Parliament'. There's no gain without pain. If we want CDF then we must pay for it. If we want roads like in my constituency, then we must pay for it.”
The President Uhuru Kenyatta administration enacted a fuel VAT of 16% in 2018, however after opposition demonstrations, the rate was bargained down to 8%.
However, some opposed to the idea pointed out that it would make the already high expense of living worse.
Ugunja MP Opiyo Wandayi (Minority leader) said, “If there's one thing that is going to increase the cost of living in all aspects, it is this proposed increment on the VAT fuel.”
“If there's one thing that this government should have done from the so-called hustler, was to cushion the hustler from an increment in the cost of fuel,” he added.
Regarding Kenya Kwanza's claim that the adjustment was made in order to attain a unit rate of tax, he asserted that there is no compulsion under the law.
“There's nowhere in the law where we are compelled to have a uniform rate of VAT on all products and services.”
After the voting, a number of lawmakers—mostly those who were against the bill—left the room.
Junet Mohamed, a member of parliament for Suna East, dubbed the clause as the most obnoxious in the contentious Finance Bill, 2023.
“When you increase VAT on fuel to 16 per cent from eight per cent, it is one thing that is going to make life very expensive for Kenyans.”
“When we were campaigning last election, Kenya Kwanza told us when they were launching their plan that the problem with fuel is taxation, we're going to look into taxation and reduce taxes on fuel,” he said.
Wamuchomba, who broke with Kenya Kwanza tradition, claimed that citizens' lives were too miserable to justify the raise.
“We cannot afford to add more levy on fuel because fuel is a catalyst of everything. Right now, our people are suffering and production especially in our rural areas is going to go to zero if we add tax on fuel,” Wamuchomba said.
Homa Bay’s Joyce Bensouda quipped, “Therefore, after we've taxed nearly everything there's no need of pretending, of executing and implementing 16 per cent taxation on fuel.”
Likoni’s Mishi Mboko said, “We are tired as Kenyans, Kenyans are hungry, they don't have money. I beg my colleagues to be objective leaders and reject this amendment and retain it at eight per cent.”
Mark Mwenje of Embakasi West stated that he was unable to approve a 13.0% increase in fuel prices.
“This increases the cost of living, the one thing that they always promised that would come down,” he said.
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