High Court Thwarts KRA’s Plan to Impose New Fuel and Beer Taxes

Kenya’s High Court has stopped the Kenya Revenue Authority (KRA) from imposing new taxes on goods including fuel and beer.

KRA had planned to increase exercise duty on these products and 29 others such as bottled water and juice from October 1. Other items that are set to attract higher taxation are cigarettes, bottled water, and motorcycles (boda boda).

The ruling issued by Justice James Makau followed a determination of suit opposing the taxes, which, according to him, may be successful.

One Isaiah Odando and Wilson Yata filed a petition to stop the impending decision by the taxman to increase excise duty on the products by 4.97 percent in line with average annual inflation. The two argued that the decision will put more pressure on the cost of living.

KRA, it’d seem are determined to net more revenue by whichever means necessary without regard for the common Mwananchi.

A few days ago, High Court halted KRA from collecting 21 billion shillings through a minimum tax – and equivalent of one percent of a business’s total sales revenue regardless of profits or losses.

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This barbaric and capitalistic move is all seemingly aimed at ensuring our “good president”, the one and only Uhuru Kenyatta, completes his legacy projects in areas such as healthcare, and affordable housing – something we have nothing to write home about.

The High Court’s order is a blow to the government, which apparently, is desperately trying to make it seem like it is servicing the soaring public debt and the gaping fiscal deficit.

“If the interim order is not granted, the petitioners and Kenyans will stand prejudiced. There will be a danger to Kenyans in the further increase of fuel prices if KRA adjusts the excise duty rates on October 1 as proposed, although the decision is pending approval by the Cabinet Secretary National Treasury,” said the judge in the ruling.

The judge noted that the petitioners expressed concern and demonstrated that the case is a matter of public interest and that their constitutional rights are under threat of being breached through the tax increases.

The judge noted that the Attorney-General’s lawyer Mitchelle Omuom was yet to receive instructions on how to oppose the case.

Meanwhile, KRA opposed the order and temporarily froze the taxes terming the application premature because the proposed levy is yet to be authorized by the Treasury Cabinet Secretary.

The court was also told that the decision to increase the taxes does not end with the KRA, since it will seek for approval in parliament before implementing the new rates.

If the new rates take effect, manufacturers will pass on the additional cost of the commodities they produce to consumers in what will further stoke public outrage over the high cost of living.

Consumers will have to part with 5.77 shillings more for a liter of beer and spirits prices will rise for a whopping 13.20 shillings!

Petrol will increase by 1.09 shillings a liter, elevating the excise duty to 23.04 shillings whereas kerosene and diesel will increase by 0.566 shillings per liter.

The adjustment is in line with the law that demands that excise duty be revised upwards in tandem with the cost of living measure or the average rate of inflation in the 12 months through June.

Well, the government’s recent economic decisions, are angering Kenyans who are still reeling from the effects of the COVID-19 pandemic.

The cost of living is rising and KRA’s implementation of new taxes will only worsen an already dilapidated state. As such, it should highly consider pausing the annual inflation adjustment tax that affects excisable goods.