The National Treasury has revealed that Kenyans will continue paying more for fuel in what is perceived as disobedience to court orders barring the 16% VAT levy on petroleum products.
Treasury Chief Administrative Secretary (CAS) Nelson Gaichuhie on Wednesday alleged that his Ministry had not been served with the court order that barred implementation of the new tax.
According to Gaichuhie, who also served as Subukia MP, the 16 percent VAT will remain in place until President Uhuru Kenyatta assents to the Finance Bill.
The CAS, who was accompanied by ERC Director General Pavel Oimeke, was meeting with Senators to discuss the recently imposed tax.
Treasury CS Henry Rotich and the ERC Director General have been sued for contempt by Sumawe Youth Group which had obtained temporary orders stopping the execution of 16 percent levy.
Lawyer Ken Amondi said the ERC was served with the orders and the CEO acknowledged receipt to the media.
The remarks by CAS Gaichuhie came shortly after Gatundu South MP Moses Kuria revealed that the VAT was here to stay.
Moody's Investors Service, an international rating agency, has warned that Kenya may be forced to triple its borrowing requirements and at a much higher cost if it postpones the imposition of the unpopular VA) on fuel in the wake of ongoing dilution of its public finances.
In its latest analysis of Kenya’s fiscal position, Moody's noted that the annual borrowing could hit 20 percent (Ksh1.77 trillion) of the GDP (Ksh8.845 trillion) or triple the budgeted deficit of Ksh559 billion if the government fails to implement key reform measures.
According to Moody’s, postponing the 16% VAT will see the country unable to raise the Ksh71 billion that it seeks to collect from the new fuel levy.
Besides, the souring relations between Kenya and the International Monetary Fund (IMF) will weaken the country’s rating in global financial markets – hence significantly increasing the borrowing expenses.
