Lobby sues KRA over excise duty on petroleum products

Tuesday, September 21st, 2021 00:00 |
A fuel station attendant refills a car. The high fuel prices have been blamed for the rising cost of living. Photo/PD/FILE

A lobby group has petitioned the High court seeking orders to quash the decision by Kenya Revenue Authority (KRA) to adjust excise duty rate for all petroleum products. 

In a petition filed in court by UFANISI Centre, the youths from Korogocho want to suspend the move to have prices of fuel in Kenya go up yet again starting from October 1.

This follows a move by the taxman that would see excise duty on the petroleum products rise by 4.97 per cent from October 1, in line with average annual inflation.

Through  lawyer Kenneth Amondi, the youths say the decision by KRA Commissioner General Githii Mburu to adjust excise duty for petroleum products though discretionary is bound to burden the already overtaxed Kenyans.

“This court be pleased to issue temporary conservatory orders quashing the decision by the Commissioner General of the KRA  to adjust excise duty rates for petroleum products effective October 1, 2021 subject to approval by the Cabinet Secretary Treasury and National Planning pending the hearing and determination of this application inter-partes,” states the youths under the banner name UFANISI Centre.

The petition follows another landmark court ruling which saw  minimum tax being quashed in a Machakos court yesterday.

The base income tax is payable by all persons regardless of whether or not they make a profit.

Energy and Petroleum Regulatory Authority (Epra), which sets fuel prices, announced a surge in fuel prices which saw the cost of petrol soar above Sh130, the highest so far.

Epra announcement last week  was met with anger and criticism after the government decided to cut compensation to fuel marketers that had kept the prices unchanged for two months.

Fuel is one of the biggest contributors to a high cost of living - as manufacturers and producers pass on the higher transport and energy costs by increasing prices of consumer goods.

Documents filed in court by Isaiah Odando and Wilson Yata, officials of UFANISI claims KRA and Epra have ignored proper public participation of Kenyans before adjusting the rates of excise duty using the average inflation rate for the financial year 2020 to 2021 of 4.97 per cent as determined by the Kenya National Bureau of statistics contrary to the Constitution.  

“The respondents have subjected Kenyans to heavy fuel tax notwithstanding that Kenyans are overburdened contrary to the basic principles of social justice and the economic interest of Kenyans under Article 10(2)(b), 2(2) and 46(1)(c) of the constitution,” the petitioners argue. 

Opaque petroleum subsidy

Further, the lobby group says that the government has been operating an opaque petroleum subsidy fund which has been receiving funds in billions from the Petroleum Development Levy without disclosing the regulations guiding it and circumstances under which it may be used to cushion Kenyans against fuel price hikes.

“The same was devoid of proper public participation at a time when Kenyans are reeling from the economic consequences of the Covid-19 pandemic thereby compromising the peoples entitlement to social justice,” says the petitioners.

“That I can confirm that we have a keen interest in public affairs and that the cost of living is too hard to bear for the common citizen and that an increase in fuel prices will definitely have ripple effects in other sectors of the economy in terms of higher transport costs, general increase in prices of basic goods and services and costs of agricultural inputs,” says Odando in his supporting affidavit. 

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