By Samuel Ouma
High cost of living for Kenyans stay in put after President Uhuru Kenyatta rejected proposal by the National Assembly to shelve 16% VAT on fuel and petroleum products for another two years.
Instead, the president sent the Bill back to Parliament proposing a reduction of the controversial 16 per cent fuel tax to 8 per cent saying the unpopular tax is necessary for the economy.
He revealed that should the legislators accept the proposal to cut the tax by 50%, the price of petrol and diesel will significantly drop. The Head of States appealed with traders to drop commodity prices to reflect the proposed drop in fuel prices.
“Just as business owners took the new VAT rates as an opportunity to increase the cost of goods, I expect them not to take advantages of Kenyans and lower their prices without delay,” Said President Kenyatta.
Even though he confirmed his concerns for Kenyans who have been hit hard by 16% Value Added Tax since September 1,2018, he justified the need to tax petroleum products saying the government requires money to support projects as a result of 2010 constitution order.
Mr. Kenyatta noted that more than Ksh.1 trillion($100 billion) has been allocated to counties since he came to power in 2013 and cited free primary education, road construction, maternal care, free public day secondary school education and free texts books for students as some of the development projects his government has achieved.
However, he assured Kenyans that by cutting the tax to 8% the government will still not bridge the 2018/2019 budget deficit.
In July this year, Treasury Cabinet Secretary Henry Rotich prepared a historic budget for the financial year 2018/2019 which amounts to Ksh.3.07 trillion ($307 billion), 10.83% increase compared to last year’s budget which stood at Ksh.2.77 trillion ($277 billion).
As a result of rough economic times, Mr. Kenyatta announced major cuts on expenditure across governments in a bid to relieve taxpayers. He reduced spending on training and seminars, foreign and domestic travels and hospitality. However, he divulged an increase in finances to Judiciary and the office of Director of Public Prosecution to aid in fight against graft.
“These budgets cuts ask us in government that we tighten our belts. It also ensures that the sacrifices made by tax compliant Kenyans are marched by discipline from all of us in the public service,” added the President.
Parliament will resume next week discuss the proposals according to the National Assembly speaker Justin Muturi.