STATEMENT: Public Debt Crisis; The Cause Of Punitive Fuel Tax, Rise In Cost Living And Raging Poverty



Once again the over taxed Kenyans are from today going to feel the pain of over borrowing by the government as the price of fuel shoots up.

The decision by the Treasury Cabinet Secretary Mr. Henry Rotich to disregard Parliament’s resolution to suspend the 16 percent VAT on petroleum products is not only insensitive to the poor majority but also a sign of impunity on the side of Jubilee government.

Parliament through amendments to the Finance Bill 2018 suspended the implementation of 16% VAT on petroleum products to 2020 to cushion Kenyans from the increase in cost of living. The voice of the millions of Kenyans is through their representatives in Parliament and the wisdom to have the motion to defer the implementation period of the tax regime on petroleum products was as a result of the MPs’ understanding of how the common mwananchi is hard pressed when it comes to the cost of living.

It is important for Mr. Rotich and Jubilee government to note that Parliament is the only institution mandated by the constitution to make laws and this must be respected by the Executive. The latest statement by the CS for National Treasury disregarding Parliament and insisting on application of the 16% VAT tax from 1st of September (which is today) is unconstitutional, illegal and exudes the highest level of impunity.

The action by the CS action is motivated largely by conditionality set by the Breton Woods institutions like the IMF. The VAT charge on petroleum products is part of the tough conditions the IMF set for Kenya in exchange for a standby credit facility that the country can draw in the event of economic distress.

Fellow Kenyans, this latest scenario confirms the worst fears that the national debt servicing obligations has reached unmanageable levels and urgent measures should be taken to address the skyrocketing national debt. Faced by this challenge, the Jubilee government is forced to disregard parliament in order to satisfy IMF and other donors’ conditions. This is dangerous to the sovereignty of this country.

As we speak now, the national debt has hit a whooping Ksh 5 trillion and continues to increase as the government’s appetite for loans continues to increase in order to finance grandiose projects and try to appease the masses that they are working. The truth of the matter is, the Kenya is broke and is on the brink of being auctioned by creditors who are demanding their money back. This is the naked truth.

It is worrying that the national debt stands at 57% of the Growth Domestic Product and it is sad that every new born baby owes the government Ksh 120,000. We just can’t continue this way. The reckless and careless management of the public debt must be stopped.

Kenyans should now rally behind the initiative by some MPs to introduce a debt capping bill which will put a ceiling on how much the government can borrow for domestic use. The initiative by the MP for Emgwen Hon. Alex Kosgey is commendable and timely.

Mr. Rotich’s directive is irregular, unlawful, highly punitive and a total disregard of supremacy of parliament as the sole law making organ of the country. Petroleum is one of the most highly taxed products and the 16% VAT tax will have huge negative effect on the economy as it will lead to increased cost of living and inflation. It is the commoner to suffer and not the government or those in power.

We therefore demand that Mr. Rotich immediately rescinds his directive and look for other avenues of raising money to service debt obligations instead of punishing the already overburdened Kenyans. Instead of punishing poor Kenyans, the government should seal the numerous revenue leakages through corruption and stop the growing appetite for tax revenue. One thing is clear: The Founding Fathers never intended a nation where citizens would pay nearly half of everything they earn to the government. It is wrong. Under Mr. Rotich, the public debt has shot up tremendously compared to his 14 predecessors since independence.

And as Robert Heinlein said in his book The Moon is a Harsh Mistress, “There is no worse tyranny than to force a man to pay for what he does not want merely because you think it would be good for him.” We demand that Jubilee administration rescinds this decision on taxation on Petroleum products if they want Kenyans to continue being productive.

Thank you and God Bless Kenya.

Hon. Godfrey Osotsi,

Nominated MP


1st September 2018