NAIROBI, Kenya Sep 14 – President Uhuru Kenyatta is now proposing a 50 percent cut on the controversial Value Added Tax on fuel products from the current 16 per cent to 8 per cent.
The proposal, if approved by parliament, will see Super Petrol drop from the current Sh127 to Sh118 while Diesel will cost Sh107 from Sh115.
“I have spent the last few days listening to a wide cross section of views, and it is clear that you are all troubled by the effects of the rise in the prices of petrol products and its impact on the cost of living,” the president said, and assured that “I have heard, and understand your concerns which is why I have proposed as part of my memorandum to cut VAT on petroleum products by 50 per cent.”
He urged business owners to lower the prices they had hiked as a result of the new 16 per cent VAT.
“Just as business owners took the new VAT rate to increase the cost of goods and services, I expect them not to take advantage weary Kenyans and to lower their prices commensurately without any delay,” he said.
In his address to the nation on Friday afternoon, President Kenyatta said he sent back the Finance Bill 2018 to Parliament because it did not reflect the rising challenges in the country.
MPs had recommended a two-year moratorium on the increase, but President Kenyatta says that cannot be a lasting solution to the crisis.
The 16 percent VAT on Fuel Products came to effect on September 1, but has since been challenged at the High Court, leading to an order suspending it but it has not been honoured by the Energy Regulatory Commission.
President Kenyatta says the new fuel tax alone cannot enable the government to meet its financial obligations and has therefore proposed a raft of measures aimed at cutting wastage in government spending.
Therefore, he said “I have further proposed wide ranging measures in spending as well as austerity measures across all arms of government. The cuts target less essential spending, such as hospitality, foreign and domestic travel, training and seminars and other similar categories.”
He also directed government officials to exercise prudent financial management practices to save on Kenyans’ taxes due to the tough economic times.
“These budget cuts ask all of us in government that we tighten our belts, it also ensures that the sacrifices made by tax compliance Kenyans are matched with discipline from all of us in public service,” he said.
President Kenyatta has reiterated his commitment to fight corruption, saying it is the reason he increased budgetary allocations for key institutions playing key roles in fighting graft.
Several top government officials in various sectors are facing charges following recent arrests over mega corruption.
“Specifically, I have increased funding to the judiciary to speed cases of fighting corruption and economic crime,” he said.