President William Ruto defended his government’s decision to raise VAT on petroleum products from 8% to 16% on Sunday.
In a joint media interview from State House, Nairobi, Ruto, who had asserted a “need to rethink” VAT on fuel during his presidential campaign last year, said the move is to close loopholes that rogue players exploit and give the government more revenue.
According to the Head of State, his government found a 900 billion-shilling commitment on Kenyan roads in August last year, which they have attempted to reduce by stopping some of the roads that had not been constructed.
“But we still remain with about close to 600 billion shillings that we have to manage,” the president said, “If I have to complete these roads, I need extra money to do it so that whole equation changed. So I have said we increase the VAT by 8 per cent because having differential rates of 8 and 16 per cent poses an integrity problem; people use it as a problem to manipulate numbers.”
President Ruto stated that his economic advisory team’s recommendation to raise VAT on petroleum products will save the government Ksh. 50 billion.
“This 8 per cent we are adding will give us about 50 billion shillings and begin to deal with the problem of roads in our country, but to balance it out, I have removed on the same fuel, 3.5 per cent road development levy, 2 per cent of IDF, and removed 8 per cent VAT on gas,” he said.
“I have removed 14 other taxes to try and even so that we can have a balanced budget.”
To achieve a ‘balanced budget,’ the president announced that he has cancelled the government’s borrowing of 300 billion shillings, which “could have taken the country down the cliff.”
“I had to stop many of the subsidies that were being dished left, right and centre and make many changes to reorganise the whole budget because we found a country headed and sliding into bankruptcy,” Ruto said.
