A Jubilee Parliamentary Group meeting Tuesday agreed to support President Uhuru Kenyatta’s proposal to reduce VAT on petroleum products to 8 per cent.
In a heated debated, the PG meeting also unanimously agreed that there should be budgetary cuts to accommodate the reduction in VAT.
The cuts will be across the board where citizens will make a contribution through the 8 per cent VAT, while the government, Parliament and county governments contribute through reduction in budgetary allocations.
The PG meeting at State House, Nairobi, was attended by Deputy President William Ruto, Secretary General Hon. Raphael Tuju and the Parliamentary leadership.
At the meeting, President Kenyatta emphasised that transporters should not take advantage and increase fares beyond those recommended by the NTSA.
The President warned that any transporter who will increase the fares beyond the recommended ones will lose their PSV licences.
President Kenyatta last week returned the Finance Bill 2018/2019 to Parliament for re-consideration with a proposal to reduce VAT on all petroleum products by 50 per cent.
The reduction of VAT from 16 to 8 per cent means a reduction of pump prices, which is a relief as the current petrol price will drop from Sh127 to about Sh118 while those of diesel will come down from Sh 115 to Sh 107 in Nairobi.
To plug the budgetary gap occasion by the proposed VAT reduction, President Kenyatta recommended wide-ranging austerity measures across all arms of government to cut on costs.
To balance the national budget as required under the law, the Head of State said the proposed cuts in government spending will target less essential cost areas such as hospitality, foreign and domestic travel, training and seminars.
“These budget cuts ask of us in government that we tighten our belts. It also ensures that the sacrifices made by tax-compliant Kenyans are matched by discipline,” said the President.
The Finance Bill is expected to be tabled in Parliament today.