President Uhuru Kenyatta has proposed a fuel VAT cut from 16 to eight per cent, meaning the price of petrol will drop from Sh127 to Sh118 and that of diesel from Sh115 to Sh107.
The President announced this during a national address on Friday, on matters including Finance Bill, 2018 which he reviewed and returned to Parliament on Thursday evening.
President Kenyatta began his televised address with a breakdown of development projects since the Jubilee administration took over in 2013.
He noted that more than Sh1 trillion has been transferred to counties since that year and cited road construction, maternal care, free primary education, free public day secondary school education, availability of text books.
Mr Kenyatta also noted the Memorandum of Understanding with the United States for direct flights from Nairobi to New York, investments into the Jomo Kenyatta International Airport and the Standard Gauge Railway, benefits from the National Hospital Insurance Fund and stipends fro the elderly.
“All these cost money … your taxes have paid for clear and tangible products. This will propel our country to new heights of development,” he said.
The President also spoke of “bold decisions” for the sake of development, the fight against corruption and social protection programmes.
“All these we have done without substantial increases in taxes over time. We have to pay for the new constitutional order and the public services Kenyans depend on. These cost money.”
But he added: “It is clear that you are all troubled by the effects of the rise in the price of petroleum products and its impacts on the cost of living.”
He therefore proposed the 50 per cent cut to the fuel VAT and said he expects the relevant authorities ” not to take advantage of weary Kenyans and to lower the prices without any delay”.
The President noted that Kenya still faces gaps in financing so this step alone will not balance the budget.
As such, he also proposed budget cuts across all arms of government and more resources for the Judiciary and the office of the Director of Public Prosecution for the fight against graft.
“I assure Kenyans that their taxes will be used well,” he reiterated.
To the Judiciary and the DPP, he said: “Work closely together to help us restore our faith in public institutions.”