NAIROBI (Reuters) – Kenyan President Uhuru Kenyatta on Friday said a new and unpopular tax on petroleum products was necessary, but that he wanted to cut it to 8 percent from 16 percent.
The government had faced a fuel dealers’ strike, anger among commuters and a lawsuit after transport and fuel prices jumped when the 16 percent value-added tax on all petroleum products entered into force on Sept. 1.
Kenyatta rejected on Thursday a parliamentary finance bill that sought to postpone the tax altogether. Parliament will reconvene next week to examine Kenyatta’s new proposal.
The implementation of the new value-added tax on fuel is a key to government plans to shrink its fiscal deficit while funding essential programmes, Kenyatta said.
“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 said, while adding that he wanted to lower the rate because of the tax’s impact on the cost of living.
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