Why Kenyans could soon pay more for sanitary pads, diapers, tampons

Kenyans could soon be paying more for diapers, sanitary towels, tampons and fertilisers should the Tax Laws (Amendment) Bill, 2024, sail through.

The Bill, introduced by Treasury Cabinet Secretary John Mbadi, seeks to reclassify the products from zero-rated to exempt status.

It's among three new Bills to be tabled before Parliament that, Mbadi argues, will assist in boosting the country's economic growth and bridge the fiscal deficit through enhanced revenue collection.

The other two Bills include the Tax Procedures (Amendment) Bill, 2024 and Public Finance Management (Amendment) Bill, 2024.

A zero-rated good means that a seller does not charge Value Added Tax (VAT) on the sale of product but can claim back any input tax credits on goods they purchased to produce the product. In essence, the product is subject to be taxed but at zero per cent. 

On the other hand, exempted goods mean that no taxes are charged on the sale of the goods but the businesses cannot claim input tax credits on their purchases.

This means that exempted goods are less favourable for businesses as they cannot recover the taxes they paid on their inputs and more likely the burden is passed to the end consumer.

According to Mbadi, the decision to reclassify the items was attributed to reducing the government's revenue loss from tax breaks issued to specific groups or activities.

Aside from fertilizer, other items to be reclassified to exempt status also include inputs and raw materials (locally or imported) that are supplied to manufacturers of agricultural pest control products.

Critics perceive this as the State's move to target the goods despite a public uproar that shelved the proposed Eco Levy under the repealed Finance Bill 2024.

The Eco levy was a measure aimed at taxing imported and manufactured products that affect the environment.

These included products such as hygiene products, batteries, plastic packaging materials among others. 

The levy aimed to reduce micro-pollution and curb waste management.