National Treasury Cabinet Secretary (CS) Njuguna Ndung’u highlighted two reasons why the fuel tax will rise to 16 per cent from 8 per cent on Thursday, May 11.
Ndung'u spoke at Mombasa Port while receiving fuel imported from Saudi Arabia and the United Arab Emirates through the government-to-government deal signed in March 2023.
“By the way, we discovered that Kenya has the region's lowest value-added tax (VAT). Other countries have much higher than 16 per cent even though we aim to ensure that we rationalise all taxes in the future after massive studies have discovered how the market structure works.
“We still are conscious about what the East African market is doing. We have to encourage them to follow us in terms of rationalising taxes,” stated Njuguna.
His second reason for raising VAT was that the government was in dire need to raise revenue.
On May 4, 2023, the Finance Bill, 2023 was tabled in the National Assembly pending debate. One of the controversial issues that elected mixed reactions was the 16 per cent tax on fuel products.
Already, Ruto's allies promised to pass the controversial bill opposed by the opposition and matatu owners who argued that if adopted, the cost of living will sharply rise.
“We wish to make it clear from the outset that, as a party, we will try our best to ensure that this anti-people budget is not passed by the National Assembly,” Azimio La Umoja party leader, Raila Odinga, warned on May 8, while speaking at the Jaramogi Oginga Odinga Foundation in Nairobi.
Surprisingly, President William Ruto was at the forefront of quashing a similar move by former President Uhuru Kenyatta.
In September 2018, Uhuru relented on implementing the 16 per cent fuel tax after public outcry.
“I have spent the last few days listening to a wide cross-section of views. It is clear that you are all troubled by the effect of the rise in the prices of petroleum products, and its impact on the cost of living,” Uhuru noted in a statement.
In 2021, he attempted to initiate a similar move again but faced a public uproar. Then majority leader of the National Assembly, Aden Duale, opposed the decision.
"This house must rise to the occasion. We must bring a Bill. The President cannot use Article 115 to disturb Kenyans. The whole thing is about the International Monetary Fund (IMF). Who said we must charge VAT?
“We must reduce the Ksh78 taxation on a litre of petrol and other levies," Duale stated.
