Kenya economic growth to be curbed by new tax on fuel -industry
Skip to main content
- Classic 105
- East FM
- Kiss 100
- Radio Jambo
Kenya's economic growth momentum for this year could be snuffed out if a widely unpopular 16 percent Value Added Tax on fuel is maintained, the country's chamber of commerce said on Friday, pointing at higher prices of goods and transport.
The tax, which came into force on Sept. 1, is part of a government bid to boost revenue collection in order to narrow its fiscal deficit and secure an extension of a standby credit facility from the International Monetary Fund.
The High Court on Thursday ordered a temporary suspension of the tax, but prices at petrol stations visited by Reuters on Friday had not come back down.
"We are asking the government to re-think its options for financing its development and recurrent expenditure instead of overtaxing various products that already bear large tax burdens," the Kenya National C hamber of Commerce and Industry (KNCCI) said in a statement.
The Treasury could not immediately be reached for comment.
The finance ministry expects economic growth to rebound to 5.8 percent this year after drought, jitters over a presidential election and sluggish private sector credit growth cut last year's growth to 4.9 percent.
"The recent resurgence of the economy will be negatively impacted by this move and this will reverse any growth we have seen in the past year," KNCCI said.
The new VAT on fuel sent the retail price of petrol up by 12 percent per litre. Transport operators have also raised their charges and some petrol dealers have gone on strike to protest against the new tax, causing fuel shortages. The tax was originally included in a law passed in 2013, but was postponed several times, amid protests about its impact.
The revenue authority introduced the tax on Saturday but President Uhuru Kenyatta could still reverse i t by signing a bill postponing it again.
Justin Muturi, the speaker of the national assembly, told Reuters on Friday the legislature was consulting with the finance ministry to find a way forward on the tax.
Kenyan businesses and ordinary people routinely complain of a heavy tax burden. The chamber of commerce said the government could widen the tax base and increase the rate of tax compliance to 50 percent from the current 17 percent.
Click here for the latest political newsVideo Vault Poll of the day Most Popular 1 Sharon died from excessive bleeding, may have been raped â" autopsy 2 Cow strangles Lion to death in Meru 3 Obama blasts Trump and Republicans, urges Democrats to vote 4 MCA give Sonko two weeks to shift from Mua residence to City Hall 5 Suspect in ex-Garissa CEC shooting buried 'hurriedly' in Nakuru 6 FEATURE: Nair obi girls open up on sex, sugar daddies 7 How I was hired to kill Idriss Mukhtar - David Mwai 8 Detectives consider DNA test in probe into Sharonâs murder 9 No sympathy for Elachi from Kenyans on Twitter 10 Sharon's family speaks as Obado denies part in her murder Must read Judge stops VAT as Kenyans ask: Where is Uhuru? Not even Railaâs call could save Elachi from Nairobi MCAsâ ire Detectives consider DNA test in probe into Sharonâs murder Subsidies give foreign farmers edge in market Dairy farming holds huge potential as state pushes job creation for the youth Court halts Elachi's impeachment as Nairobi County Speaker Latest News Popular in classifieds POPULAR SEARCHES IN THE STAR CLASSIFIEDS
- Apartments for rent in Dagoretti North
- Apartments for rent in Westlands
- Toyota Land Cruiser for sale
- House for sale in Langata
- Apartments for rent in Nyali
- Toyota Corolla for sale
- Toyota F for sale
- Toyota HiLux for sale
- House for sale in Westlands
- Toyota RAV4 for sale