President Uhuru Kenyatta has asked MPs to cut VAT on fuel from 16 to eight percent, taking aim at the Finance Bill, 2018.
“Should parliament accept this proposal, petrol price will drop from Sh127 to Sh118 while diesel will drop from Sh115 to Sh107,” he said.
MPs will now have to raise a two-thirds majority if they are to overturn Uhuru’s proposal which waters down their proposal to shelve the VAT until 2020.
Addressing the nation on Friday, Uhuru said business owners should also reduce the cost of goods.
“I expect them not to take advantage of Kenyans and to lower their prices without any delays,” he said.
Uhuru said Kenya still faces funding gaps adding that this measure will not balance Kenya’s budget as required.
“I have proposed cuts in spending across arms of government on hospitality, foreign travels, seminars and other similar categories,” said Uhuru.
“This cut will ensure that the sacrifices made by Kenyans are marched our discipline.”
The president further noted that taxes raised by Kenyans have been used for an aggressive and successful development agenda.
Uhuru said the government has been able to build roads, connect homes to the electricity grid, and has improved health care.
“I have spent the last few days listening to a wide section of views and it is clear that you are all troubled by the effect of rise of petrol and its impact. I have heard and understand your concerns,” he said.
“Your taxes will be used well. I have also proposed to increase resources available to fight corruption. Funding to the judiciary to speed up corruption cases.”
Uhuru spoke on the matter for the first time since his return from China.
This comes even as Kenyans speculate that the cost of fuel may go up again during the monthly review on Friday due to rising global crude oil prices.
MPs have been recalled for a special sitting on Tuesday to deal with the tax issue.