Tougher times ahead as Gov't seeks to slap more taxes on flour, alcohol and beauty products

Kenyans might soon be grappling with an even higher cost of living if the Finance Bill, 2022, takes effect on January 1 next year.

Under the bill, the Treasury is seeking to impose a 16% VAT on maize, wheat and cassava flour, while potatoes and ice cream will be subject to excise tax of 15%.

At the same time, the government will revise the excise tax levied on bottled water, soda, beer and spirits by 10%.

An increase in the tax levied on chocolate will also see the product go from from Ksh. 200 per kg to Ksh.243.

Currently, beer is subjected to excise at the rate of Ksh.121.85 per liter, while cigarettes are levied Ksh.3.47 per stick.

Excise on bottled water and juice is charged at Ksh.6.03 and Ksh.12.17 per litre respectively.

On the other hand, the price of beauty products is also set to increase with supplies like jewelry, which is currently subjected to a 10% excise levy, bound to be slapped with a 15% levy.

According to Treasury Cabinet Secretary Ukur Yatani, this is in a bid to squeeze Ksh.50.4 billion shillings more to sustain the Ksh.3.3 trillion budget for the 2022/2023 financial year which was released on Thursday.

Speaking while making the budget statement before Parliament, Yatani said the higher excise is separate from the annual adjustment for inflation and is among new tax measures meant to help the government generate additional revenue.

“This has basically nothing to do with essential products… They are all luxury items that have nothing to do with the general population of this country,” Yatani said then.

Similarly, the cost of motorbikes will go up due to an excise tax increase from Ksh.12,185 to Ksh,13,404 per unit.

Inputs for construction of specialized hospitals, which were previously exempt from tax, have now been slapped with a 16% VAT, while the tax on digital services tax will be revised from 1.5% to 3.0%.

The bill will be considered by Parliament’s Finance and Planning Committee, which will thereafter table its recommendations in a report to the August House.

During Thursday’s budget reading, Yatani told Kenyans that ​​petroleum products are excluded from the increase, alongside airtime, mobile money transfers, bank fees and motor vehicles.