Fuel Prices Down as President Kenyatta Announces FY18/19 Budget Cuts

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President Uhuru Kenyatta has proposed austerity measures and budget cuts aimed at reducing the gap deficit between revenue and expenditure.

“These budget cuts ask all of us in government to tighten our belts. It also ensures that the sacrifices made by tax compliant Kenyans are matched by discipline,” said the President in a televised address from State House, Nairobi.

The President on Thursday rejected the 2018 Finance Bill that wanted the implementation of the 16 percent Value Added Tax on petroleum products for another two years.

“The Finance Bill 2018/19 brought to me yesterday (Thursday) fell short of this threshold. It 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,” said the head of state.

“Further delay in the implementation of the tax would compromise our ability to deliver basic services to Kenyans, and to maintain the trajectory of our development,” he added.

Read: IMF and World Bank are ‘Excited’ with Kenya’s Emerging Crisis

However, “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.

Should Parliament accept this proposal, the price of super petrol will drop from KSh 127 to about KSh 118, and the price of diesel will drop from KSh 115 to about KSh 107,” said Uhuru. 
Read: Raise in Fuel Tax Will Slow Kenya’s Economic Growth, Analysts Think Otherwise 

Subsequently, the Energy Regulatory Commission announced a KSh0.39 and KSh 0.29 increase in the price of a litre of Diesel and Kerosene respectively.

“The prices are inclusive of Value Added Tax (VAT) at 16 percent in line with the provisions of the VAT Act 2013. Nevertheless, the Commission shall publish new prices whenever the rate of VAT is varied by law,” Director General Pavel Oimeke said in the review of the fuel pump price for 15th September – 14th October period.

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