It Is A Sigh Of Relief For Kenyans As President Kenyatta Proposes 50 Per Cent Reduction Of VAT On Petroleum Products

On September 14, 2018 In Latest News

NAIROBI, 14 SEPTEMBER 2018, (PSCU)-President Uhuru Kenyatta has proposed a 50 per cent reduction of VAT on all petroleum products.

The President also proposed wide-ranging austerity measures across all arms of government to cut on costs as one way to bridge the gap left by what should have been financed through the VAT funds.

The reduction of VAT from 16 to eight percent effectively means the pump prices of petrol will drop from the current Sh127 to about Sh118 while those of diesel will also drop from Sh 115 to Sh 107 in Nairobi.

Addressing the Nation on a live TV broadcast from State House Nairobi today, President Kenyatta said he had already presented his proposals to parliament as part of his memorandum when he returned the Finance Bill 2018/2019 for re-consideration.

“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 50% -- from 16% to 8%,” the President told Kenyans adding that he had consulted widely over the matter.

President Kenyatta was optimistic that Parliament will accept his proposals and urged all business owners to lower their prices commensurately with the decreased VAT on petroleum products.

“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,” appealed the Head of State.

The Speaker of the National Assembly, Justin Muturi has already recalled parliament to a special sitting on Tuesday and Thursday next week to specifically discuss the Finance Bill 2018/2019.

To balance the national budget as required under the law, the Head of State said the proposed cuts in government spending will target less essential cost areas such as hospitality, foreign and domestic travel, training and seminars.

“These budget cuts ask of us in government that we tighten our belts. It also ensures that the sacrifices made by tax-compliant Kenyans are matched by discipline,” said the President

He assured Kenyans that all their taxes will be used prudently adding that his memorandum to parliament proposes increased resources to institutions mandated to fight corruption specifically the Judiciary, the Office of the Director of Public Prosecutions (DPP) and other investigative agencies.

“I expect these bodies to work together to help us restore our faith in public institutions,” added the Head of State.

President Kenyatta said he had taken the bold steps- to balance short-term pain and long-term gain so that the country can continue on its trajectory of transformation.

The Head of State also explained why he had returned the amended Finance Bill 2018/2019 to parliament saying he had a constitutional obligation to ensure that legislative instruments presented for his assent must conform to national aspirations, fulfil the government’s basic obligations to the people and  ensure  they were implementable .

He said the Finance Bill presented to him on Thursday fell short of acceptable threshold as it only protected the status quo and sacrificed the 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

President Kenyatta also took time to retrace the socio-economic and political journey the country has travelled since the country adopted the new constitution in 2010 saying much had been achieved especially financing devolution where over one trillion shillings have been transferred to the county governments since 2013.

“Having transferred over a trillion shillings to county governments since 2013, we have seen major improvements in service delivery, and improvements in the lives of Kenyans,” said the Head State.

He added: “That’s why we will continue to protect and entrench devolution and the new constitutional order, notwithstanding the cost.”

He said the taxes paid by Kenyans had been used to pursue an aggressive and successful development agenda.

Apart from funding devolution, said the President, taxes raised by Kenyans had also been used prudently to finance improved , affordable and expanded healthcare  and the monthly stipends for over 700,000 vulnerable and elderly  citizens.

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