Rotich suggests 12pc tax to appease MPs

By Moses Michira and Moses Nyamori | Friday, Sep 7th 2018 at 11:56
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Long queues at Total Petrol Station in Kitui town on September 6, 2018 as impact of new fuel taxes continues. [Paul Mutua/Standard]

National Treasury Cabinet Secretary Henry Rotich arrived back in the country from China on Wednesday night to a huge financing crisis that threatens to tear his spending plans apart.

Mr Rotich flew back ahead of his boss, President Uhuru Kenyatta, and held his first closed-door meeting at Parliament Buildings yesterday where debate over the new fuel levy kicked off last week.

The crisis meeting was attended by House Speaker Justin Muturi, Attorney General Paul Kihara, National Assembly Majority Leader Aden Duale, Solicitor General Ken Ogeto and Deputy Chief of Staff Njee Muturi.

Also in attendance were Budget and Appropriations Committee chairman Kimani Ichung’wa and Finance committee chairnan Joseph Limo.

Two hours

National Assembly Minority Leader John Mbadi had also been invited for the meeting that lasted two hours but did not attend as he was said to be out of town.

Even before the meeting with House leaders and the President’s legal advisers, Rotich suffered another setback after the High Court sitting in Bungoma ruled that the imposition of Value Added Tax (VAT) on petroleum products should be suspended awaiting the President’s assent to the Finance Bill.

Sources privy to the confidential discussions painted a picture of a CS beseeching the National Assembly to reconsider its position on his new taxation measures. Rotich is reported to have given concessions to lower VAT to 12 per cent, in a bargain he hoped would be agreed to by Parliament.

It was not immediately clear if he was conveying a message from the President following MPs’ rejection of several other proposals contained in the Finance Bill.

Mr Muturi later described the deliberations as “work in progress” as nothing had been firmed up yet.

The choice of attendees spoke volumes about the next course of action for a government desperately seeking to shore up revenues in an increasingly tough international market.

From the China tour, for instance, Kenya failed to get confirmation about its biggest request for a Sh190 billion grant to complete the Standard Gauge Railway project.

Rotich said they had lined up a series of meetings over the Finance Bill and promised a “solution soon”.

“We have held discussions with the leadership of Parliament and we will have more engagements to find a solution. This is our first meeting and we will have a series of meetings to get a solution soon,” said the CS.

Muturi assured the country that the National Assembly would work with the Executive to find a solution to the fuel crisis that has caused a spike in consumer prices, resulting in a countrywide uproar.

“We have had a meeting to try and address the issue you have raised and this was just the first meeting. I can assure you that going forward we will be able to address the issues that might be of concern to Kenyans,’’ said Muturi.

Rotich had reportedly reached out to the National Assembly’s leaders while in China and is said to have proposed budget cuts to plug revenue shortfalls that will be occasioned by the suspension of the fuel tax by another two years.

Free services

The Standard learnt that Rotich told the legislators that the Government could consider reviewing some of the free services it offered the public.

The CS is said to have listed free maternal healthcare and free primary and secondary school education as some of the services the Government could reconsider should the new tax measures be rejected.

He was, however, reportedly told to go for non-essential areas in the event the proposal for budget cuts was considered.

The two arms of Government consequently formed a technical team drawn from Treasury and the National Assembly’s Budget committee to address the matter.

The MPs will also be requested to reconsider their rejection of a proposal to establish the State-backed Kenya Mortgage Refinance Company, which is a central pillar to the President’s Big Four development programme.

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