Why Ruto’s announcement of 8pc VAT on fuel is misleading

William Ruto’s announcement that Value Added Tax (VAT) on fuel will be reduced from 16 per cent to 8 per cent has sparked legal and policy scrutiny, with existing tax laws indicating the measure may not be implemented immediately

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Speaking during a public address in Kisii on Wednesday, April 15, 2026, Ruto said the government would lower VAT to 8 per cent for three months to cushion Kenyans from high fuel prices.

“We have also stepped in to bring down VAT from 16 per cent to 8 per cent for the next three months,” he said, describing the move as part of a broader Ksh6.5 billion intervention aimed at easing the burden on consumers.

However, the proposal faces legal hurdles under the Value Added Tax Act, which sets the standard VAT rate at 16 per cent.

Section 5(2)(b) of the law provides that, in all non-zero-rated cases, the tax rate shall remain at 16 per cent of the taxable value. Meanwhile, Section 6(1) allows the Cabinet Secretary for the National Treasury to vary the rate by a margin not exceeding 25 per cent of the base rate through a Gazette notice.

In practical terms, this provision limits any downward adjustment from 16 per cent to a minimum of 12 per cent, meaning a reduction to 8 per cent falls outside the allowable legal range.

As a result, such a change cannot be effected through an executive directive alone and would require an amendment to the law by Parliament.

The implication is that the proposed VAT cut, while presented as an immediate relief measure, is not legally actionable under the current framework.

The announcement comes amid growing pressure to ease fuel costs, with Ndindi Nyoro proposing a broader package of fiscal measures.

Nyoro has called for a Ksh5 billion subsidy top-up, removal of the Ksh7 per litre fuel levy introduced in 2024, and a five-percentage-point VAT reduction. He argues that the combined measures could lower pump prices by up to Ksh27 per litre.

“The drastic increment in fuel prices is unacceptable,” Nyoro stated, adding that the proposals aim to restore fuel taxation to pre-2023 levels rather than introduce new subsidies.

While subsidy measures such as the recently announced Ksh6.2 billion allocation fall within the government’s executive authority, changes to VAT remain bound by statutory limits.

The developments come as fuel prices continue to rise following the latest review by the Energy and Petroleum Regulatory Authority (EPRA), adding pressure on transport, logistics and the overall cost of living.