, NAIROBI, Kenya, Sep 14 – President Uhuru Kenyatta has faulted the National Assembly for failing to take into account the country’s development agenda while crafting the Finance Bill (2018) which sought to suspend, in totality, the 16 per cent Value Added Tax (VAT) on fuel products.
Kenyatta who in a televised address Friday afternoon recommended the halving of the 16 per cent tax charge which took effect on September 1 said lawmakers failed to rise to the occasion and secure the country’s development road-map.
“The Finance Bill (2018) brought to me yesterday (Thursday) protected the status quo and sacrificed our bigger vision. It took the easy path instead of rising to the challenges of our time. It was good politics but bad leadership,” he said in the speech broadcast from State House, Nairobi via the national broadcaster KBC.
The Head of State said he declined to sign the Bill as was since it would have negatively impacted on his four-pillar development pledge of universal healthcare, food security, expanded manufacturing, and affordable housing.
“As your President, I have a constitutional duty to ensure that legislative instruments presented for my signature conform to our national aspirations, fulfill government’s basic obligations to our people, and are implementable,” Kenyatta said.
Kenyans have been protesting the new fuel tax of 16 per cent, which shot up commodity prices, leading to its suspension by a Bungoma High Court following a petition filed early last week, even though the order has not been honoured by the Energy Regulatory Commission (ERC).
The president noted that the current Constitution created a large political and bureaucratic representation making the collection of revenue critically important if the country was to remain on the development trajectory.
President Kenyatta noted that the Furnace Act (2013) on which the 16 per cent VAT on fuel is anchored was primarily crafted with the new constitutional dispensation in mind, the country having adopted a new Constitution in 2010.
“The purpose of this tax was simple. We have to pay for the new constitutional order, and the public services on which Kenyans depend alike,” he said.
The 11th Parliament had following the 2013 election been split into two Houses in line with the Constitution (2010) creating the National Assembly and the Senate.
The Constitution had also created executive authorities in 47 counties with an equal number of legislative assemblies.
“The 2010 constitution widened Kenya’s democratic space; it also fundamentally altered the structures and functions of government. With it, we have seen a substantial increase in political and bureaucratic representation at every level,” the President noted in his speech.
“The National Assembly has grown from 290 to 349 members; and our new Senate has 67 elected and nominated members. We also have forty-seven governors, forty-seven deputy governors, and forty-seven new county assemblies – in which sit more than a thousand Members of County Assemblies,” he elaborated.
Kenyatta noted that since the advent of devolution, over Sh 1 trillion had been channeled to counties with an equally huge amount of money channeled to sixteen independent offices and commissions.
“We are very proud of the speed with which we have implemented the new constitution, and devolved government to the people,” he said adding that the lives of Kenyans had significantly improved as a result.
President Kenyatta however said the government also needed to ensure the judiciary and agencies fighting economic crimes are well funded to fight corruption, a vice that has been blamed for loss of public funds.
News of the President’s referral of the Finance Bill (2018) Thursday evening had elicited sharp reactions as it remained unclear at the time what recommendations State House had sent to the National Assembly.
National Assembly Speaker Justin Muturi had, following the referral, notified members of a Special Sitting set for Tuesday to convey President Kenyatta’s message.
The fuel VAT under the Finance Act (2013) had been suspended twice, an initial transitional clause having halted its implementation for three years after which lawmakers suspended it for another two years in 2016.
The second suspension lapsed on August 31 prompting the Kenya Revenue Authority to implement the VAT charge on fuel on September 1.
Should Kenyatta’s proposal to lower the VAT charge from 16 to 8 per cent, the price of super petrol in Nairobi will drop from the current Sh127 to Sh118 while diesel will cost Sh107 from Sh115.