Due to the average annual inflation, excise duty on the products like beer, juice and bottled water will increase by 6.3 per cent. This is effective from October 1 as the Kenya Revenue Authority (KRA) moved to effect annual inflation tax adjustment on excise duty charged on the products.
The public to give their views on the proposed adjustments by September 16. This will allow Kenya Revenue Authority to make appropriate decisions on the adjustments before implementing.
“The specific rates will be adjusted using the average inflation rate for the financial year 2021/2022 of six decimal three per centum (6.3per cent), as determined by the Kenya National Bureau of Statistics, and the adjusted specific rates will be effective from October 1, 2022,” the KRA said.
The manufacturers will have to pass the additional cost to the product’s end consumers. This will have a negative effect to most households across the country.
The adjustment is in line with the law that demands that excise duty be revised upwards in tandem with the cost of living measure or the average rate of inflation in the 12 months through June.
The new inflation adjustment is seen as a means of protecting the government’s spending power from being eroded by the rising cost of living.
Back in December 2020, the cost of 30 products was increased by at least 5.43 per cent by KRA. The increase led to protests from traders across the country including distributors of alcoholic drinks.
When Ukur Yatani, the Treasury Cabinet Secretary was delivering his budget proposal for 2022/23, he promised to empower KRA to exclude basic commodities from the frequent tax reviews to manage inflation over the year. Through the empowerment KRA would not touch some products while reviewing taxes due to inflationary effects, one of the causes of an increase in taxes for basic commodities.
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