Epra boss, Daniel Kiptoo, faces day in court over fuel taxes row

Energy and Petroleum Regulatory Authority (EPRA) Director General Daniel Kiptoo before the National Assembly Departmental Committee on Energy at County Hall Nairobi on July 11, 2023. PHOTO | DENNIS ONSONGO | NMG

Energy and Petroleum Regulatory Authority (Epra) director-general Daniel Kiptoo has been summoned to explain why he disregarded a court order suspending the implementation of the Finance Act 2023 and adjusted fuel prices.

Three High Court judges hearing petitions challenging the provisions of the Act on Monday directed Mr Kiptoo to appear before them on September 13 as sought by Busia Senator Okiya Omtatah.

Mr Omtatah has accused the Epra boss of adjusting the fuel prices in line with the Finance Act, 2023 against the court order.

Read: Epra faces legal test in fuel price review

Justices David Majanja, Christine Meoli and Lawrence Mugambi issued the summons, even as they declined to suspend the implementation of the housing levy and backdating of deductions to July 1, as pleaded by the Law Society of Kenya (LSK) among other lobby groups.

“Summons are hereby issued to Daniel Kiptoo Bargoria to appear in court,” the judges said.

Mr Omtatah submitted that the High Court issued an order on June 30 suspending the implementation of the Finance Act, 2023 but Epra adjusted the prices by doubling the value-added tax (VAT) charged on the commodity to 16 percent from 8.0 percent.

The senator said Epra hiked the prices of petroleum products in defiance of the conservatory order, even after being served with the court order.

“To cure this absurdity and to avoid compromising the public interest in the rule of law and the authority of this honourable court, it is profoundly important that Mr Daniel Kiptoo Bargoria is punished for contempt according to the law,” Mr Omtatah submitted.

On the housing levy, the LSK through its president Eric Theuri submitted that Treasury Cabinet Secretary Njuguna Ndung’u appointed the Kenya Revenue Authority (KRA) the collection agent against the law because there are no enabling laws giving the taxman such powers.

Mr Theuri further said the KRA has issued a notice to employers and employees notifying them of the decision to backdate the levy to July 1.

“Between July 1 and 20, there was a court order stopping the implementation of the Act. The implementation of the housing fund cannot, therefore, be implemented retroactively as suggested in the notice,” he argued, adding that the levy can only be implemented after the Court of Appeal lifted the conservatory order.

Mr Theuri said the net effect of the provision of Section 84 of the Finance Act would be to burden taxpayers who will be forced to shoulder an unfair tax burden contrary to the Constitution.

The judges, however, declined to block the implementation of the housing levy saying the Court of Appeal considered all the aspects when it lifted the suspension.

“Although the Court of Appeal stated that the (High) Court would consider suspending provisions of the Act whose implementation would have an irreversible effect and where funds cannot be refunded, we are not persuaded that we should exercise this jurisdiction at this stage in view of the fact that these issues were all before the court before it made the decision,” the court said in a ruling read by Justice Majanja.

The LSK argued that the housing levy is discriminatory as it only obligates those in formal employment to contribute to the scheme without a corresponding duty on persons in informal employment to contribute, yet the latter is the target population of the scheme.

Further, the LSK said the levy is uncertain in terms of eligibility criteria and administration, making it impossible for the beneficiaries to be known or Kenyans to know the government agency that will administer the fund.

“Section 84 only provides for remittance of the housing levy by both employer and employee but there is no body that has been charged with the administration of this levy. If indeed the said levy was to be administered by a particular government agency then nothing would have been easier than for the legislation to state so,” Mr Theuri said.

Senate Speaker Amason Kingi through lawyer Cecil Miller argued that the Finance Act underwent sufficient public participation and that the Act does not affect the functions and powers of county governments as alleged.

Read: Fuel prices go sky-high in Epra VAT review

“In any event, there was a concurrence between the Speaker of the Senate and the Speaker of the National Assembly confirming that the Finance Bill, 2023 did not have provisions affecting the functions and powers of county governments,” Mr Miller said in a response filed in court.

The court at the same time consolidated all the petitions and directed parties to prepare themselves for hearing on September 13 and 14.

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