Keep the tax system fair and transparent – Business Daily
A good tax system must meet at least these five basic conditions: fairness, adequacy, simplicity, transparency, and administrative ease.
The revelation that the Ministry of Energy has been collecting higher diesel taxes quashed by Parliament is yet another example of how Kenya’s tax system continues to fail the transparency test.
Having failed to convince Parliament to increase the Petroleum Development Levy (PDL) to Sh5.40 per litre of diesel, from 40 cents, Energy sector players came up with a backdoor deal to retain the tax that had been abolished by Parliament in October last year.
This has exposed the Kenya Revenue Authority (KRA) to a Sh11 billion refund claim from motorists after the taxman continued to collect higher levies on diesel, 11 months after a law raising the fees was quashed.
Insiders at KRA — the principal collector of all government levies and taxes —said the agency went on collecting the levy at the higher rate after it received guidance from the Ministry of Energy but has now been left with a legal nightmare since the ministry failed to follow through on its end to legalise the tax by the issuance of a new gazette notice.
But in another show of contempt to the taxpayer, the ministry and the KRA have refused to legitimise the tax through a new process that requires them to facilitate public participation and get the tax gazetted.
We call on the relevant agencies to move with speed and correct the anomalies and if any person is found to have slept on the job, then the necessary disciplinary action should be taken.