Fuel Debate: President Kenyatta Proposes Reduction of Tax by 50 Percent

In what could be a major relief for Kenyan taxpayers, President Uhuru Kenyatta has proposed a reduction of the contentious Value Added Tax (VAT) on petroleum products from 16 to 8 percent.

Speaking at State House during his address to the nation on Friday, the President said he has returned back to the National Assembly the Finance Bill 2018 that proposed pushing the implementation of the proposed levy on fuel to 2020.

“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 percent — from 16 percent to 8 percent," the President said.

If Parliament adopts President Kenyatta's proposal, the price of Super Petrol will drop from the current Sh127 in Nairobi to Sh118 while Diesel will retail at Sh107 from Sh115.

“Should Parliament accept this proposal, the price of super petrol will drop from Sh127 to about Sh118, and the price of diesel will drop from Sh115 to about Sh107. 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.

He also announced reduction in government expenditure on hospitality, foreign and domestic travel, seminars and trainings.