Justice James Makau on Monday, issued orders temporarily suspending the implementation of the new tax tariffs.
It is a big win for Kenya in what could have turned out to be another burden of fuel price hike. This Kenya Revenue Authority had sought to adjust excise duty rates for petroleum products.
KRA had increased excise duty on the products by 4.97 percent in line with average annual inflation, which was to take effect on October 1, 2021.
“I find the application meets the threshold for interim orders. The petitioners have established they have a prima facie case with a likelihood of success,” Justice Makau said.
The petition was filed by two Kenyans who said that motorists in the country were already paying too much at the pump.
The two; Isaiah Odando and Wilson Yata, are officials from a community organisation based in Korogosho slums named Ufanisi Centre.
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They argued that Kenyans were not consulted before the decision to increase the excise duty was forwarded to Treasury CS Ukur Yatani for approval.
“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 people’s entitlement to social justice,” they argued.
Following a hike in petroleum prices in latest price review by EPRA, Kenyans seem to have found a way to cut their fuel costs – zooming over the border into Uganda and coming back with a full tank.
The trip only makes sense for Kenyans living along the nearly 800-kilometer (500 miles) border with Uganda, and they have been making the most of the opportunity.
In Uganda, they can buy a liter of petrol for Ksh.110, about Ksh.30.27 lower than in Kenya.
People from Bungoma and Busia counties, both near the Ugandan border, have been making the drive over in large numbers.
“They come back after refueling at petrol stations in Uganda’s border towns of Busia and Malaba,” said Bob Oundo, an official in the part of Busia that lies on the Kenyan side.
Latest move by the court deals a second blow to KRA within a month.
on September 20, High Court judge George Odunga declared minimum tax provisions unconstitutional and the minimum tax guidelines void.
President Uhuru Kenyatta assented to the Finance Act, 2020 which amended the income tax act in June 2020 by introducing a new section 12D providing for the introduction of minimum tax at the rate of 1 percent of the gross turnover effective January 1, 2021.
Four months later, the High Court stopped the implementation of a 1 percent minimum tax which was to fall due on April 20, 2021.
Judge Odunga issued conservatory orders blocking KRA from effecting the tax pending the hearing and determination of the petition.
“… I grant conservatory orders restraining the 2nd Respondent Kenya Revenue Authority (KRA) whether acting jointly or severally by itself, its servants, agents, representatives or howsoever otherwise from the implementation, further implementation, administration, application and/or enforcement of Section 12D of the Income Tax Act, Chapter 470 of the Laws of Kenya as amended by the Tax Laws (Amendment) (No.2) Act, 2020 by collecting and/or demanding payment of the Minimum Tax pending the hearing and determination of this Petition.” said justice Odunga.
