Government to tax alcoholic products
As a result of the government enforcing new taxes to pay for the Sh3.3 trillion budget for this fiscal year, consumers will start seeing higher costs for alcohol, juices, cosmetics, and beauty products as of today [Friday].
The addition of the new consumption taxes, which are intended to help raise an additional Sh50.4 billion in revenue, will help offset the double-digit increase in food prices that have already sent the cost of living to a nearly five-year high.
The government has increased excise duty on several items and services it deems dangerous, opulent, or ethically dubious by at least 10% according to the Finance Act 2022, which President Uhuru Kenyatta signed into law last week.
KPMG
The high cost of living and decreased household discretionary income will result from these levies. Stephen Waweru, a senior manager for tax services at consulting and auditing firm KPMG, predicted that life would be a little challenging.
The VAT taxes are simple to collect, as opposed to direct taxes (like income taxes), which can be avoided by choosing not to report your actual income.
![Tax](https://www.kenyastatenews.com/wp-content/uploads/2022/07/FB_IMG_1656686036552-240x300.jpg)
Since the House rejected the Finance and Planning Committee’s recommendation to exempt alcohol from higher taxes this fiscal year, consumers of spirits like whisky, gin, and rum have been hit the hardest. The duty per litre has increased by 20.31 per cent to Sh335.30.
In addition, taxes on wine have increased by 9.99 per cent to Sh229 per litre, beer has increased by 9.97 per cent to Sh134 per litre, and fruit and vegetable juices will rise by 9.29 per cent to Sh13.30.
MPs action
The MPs rejected the Budget Committee’s recommendation to exempt alcoholic beverages from further price increases because doing so would encourage the consumption of illicit beverages at a time when the majority of households are struggling to make ends meet due to rising living expenses and stagnant wages. The Budget Committee was chaired by Gladys Wanga.
According to Philip Muema, a partner at the tax and business advisory firm Andersen Kenya, “these taxes are raising the cost of life for middle-class as well as low-income households who would pay more even when they take Fuliza (Safaricom’s overdraft facility)”.
A tariff increase from 10% to 15% has been imposed on the multi-billion dollar cosmetics and beauty products industry, which has experienced an increase in spas in recent years.
Additionally, the cost of imported jewellery, such as necklaces, earrings, bracelets, and rings, is expected to increase due to a tariff increase from 10% to 15%.
The duty on bottled water has remained unchanged at Sh6.03 per litre under the Finance Act, which was passed by lawmakers before the House’s indefinite adjournment in advance of the elections on August 9. The Treasury had proposed an increase to Sh6.60.
![Tax](https://www.kenyastatenews.com/wp-content/uploads/2022/07/images-99-300x200.jpeg)
The MPs also fought to prevent an increase in tax from the existing 7.5 per cent to 20 per cent on money wagered on betting, gaming, prize competitions, and winning lottery tickets.
The MPs also fought to prevent an increase in tax from the existing 7.5 per cent to 20 per cent on money wagered on betting, gaming, prize competitions, and winning lottery tickets.
After legislators rejected a predicted 10 per cent increase from the Treasury, the tax on the purchase of motorbike taxis (Boda Bodas) shall also stay fixed at Sh12,185.16 per unit.
The MPs imposed a new 10 per cent excise charge on mobile phone imports as well as Sh50 for each imported ready-to-use SIM card to close the resulting income deficit.
Mobile network subscribers already pay 20 per cent duty on their airtime and internet, as well as 12 per cent tax on money transfer services like the highly regarded M-Pesa, and they will pay an additional 20 per cent duty on the fees that digital lenders charge for lending money.