President Uhuru Kenyatta proposes fuel tax reduction to 8pc

President Uhuru Kenyatta on Friday proposed that the 16percent fuel tax be reduced by half.

During his much anticipated address to the nation, the President expressed concern over the increased tax burden that was placed on Kenyans when the VAT was effected.

“I have heard and understood your concerns, which is why I have proposed, as part of my memorandum, to cut VAT on petroleum products by 50percent — from 16percent to 8percent.

“Should Parliament accept this proposal, the price of super petrol will drop from Ksh.127 to about Ksh.118, and the price of diesel will drop from Ksh.115 to about Ksh.107. Just as business owners took the new VAT rate as an opportunity to increase the cost of goods and services, I expect them not to take advantage of weary citizens, and to lower their prices commensurately and without delay,” he said.

The Finance Bill 2018 was returned to Parliament on Thursday evening and Speaker Justin Muturi confirmed that the House will be reconvened on September 18.

President Uhuru Kenyatta further explained the reasons behind increasing fuel tax as “the new constitutional order, and the public services on which Kenyans depend”.

He also announced an increase in finances to the Judiciary that recently criticised Treasury over budget cuts. The Office of the Director of Public Prosecution is also to benefit from the proposed changes.

The Government is also expected to reduce its spending on hospitality, foreign and domestic travel, training and seminars in a to deal with the financing gap.

In 2009, when Uhuru Kenyatta served as the Finance Minister, he gave a similar directive that saw Kenyan diplomatic delegations reduced, fuel expenses vetted and government recruitment restricted. At the time, the government faced a deficit of Ksh.100billion.

Currently, the government has a fiscal deficit of Ksh.587.7billion with an expenditure of Ksh.2.49trillion.