President Uhuru Kenyatta on Friday recommended a reduction of VAT on Petroleum products to lower the price of fuel.
Kenyatta during an address to the Nation stated that he had proposed a 50 per cent reduction in the 16% VAT to 8 per cent.
The changes, he noted once approved shall see fuel prices drop significantly with a liter of Petrol going for Kshs118 down from Kshs 127.
A liter of diesel shall retail at Kshs107 from the current Kshs115.
“The purpose of the new taxes was simple, we have to pay for the new constitutional order. This costs money,” held the President, defending his decision to reject the Finance Bill 2018.
The Head of State Admitted that he was aware of concerns raised by Kenyans over the rise in fuel prices but maintained the taxes were meant to aid running government under the new constitutional dispensation.
He noted that his administration had allocated Over Kshs1 Trillion to county government since 2013 and had embarked on a development trajectory without introducing any substantial taxes.
The president regretted that the country was facing budget deficits which could not be contained by the current taxes holding that major expenditure cuts would be implemented throughout government.
“I have proposed a wide range in cuts in spending across all arms of gov’t in areas of hospitality, foreign and domestic travel, training and seminars… We still face a gap in our finances. This measure alone will not suffice to finance our budget,” stated Kenyatta.
The President appealed for an immediate drop in commodity prices saying it is expected that traders change prices to reflect the proposed drop in fuel prices and lowered tax on petroleum products.
“Just as business owners took the new VAT rates as an opportunity to increase the cost of goods, I expect them not to take advantage of Kenyans and lower t