16 Percent VAT Will not Affect Unga Prices, Government

Agriculture Cabinet Secretary Mwangi Kiunjuri on Tuesday shunned the possible effect of the 16 percent VAT imposed on fuel to elevate food prices confirming the government’s reluctance in accepting the likelihood of the increase of the price of unga.

While answering questions from journalists, Kiunjuri said that an increase of the value-added tax doesn’t necessarily mean that the prices of unga will go up.

“Millers automatically increasing the prices of maize flour because of an increase in VAT doesn’t make sense,” he said.

The Agricultural ministry is yet to hold talks with the Cereal Millers Association (CMA) over plans to increase the price of cereals as a result of the tax crisis in the country.

“We will soon have an agreement with the millers regarding the possible factors following the VAT increase,” Kiunjuri said.

Meanwhile, the price of unga is currently retailing at an average of 90 shillings in supermarkets, which is fairly affordable. An increase above that amount could mean a disaster for the low-income earners whose considering how the increase in fuel price has already impacted negatively on their lives.

The increase in fuel price, its shortage, and truckers downing their tools last week exacerbated the situation. Manufacturers and majority of the players of the key sectors of the economy have or are already factoring in the additional costs of production.

CMA chairman Mohamed Islam said that the VAT changes for processed cereals have rendered the members of these sectors inadequate time to restructure the costs without affecting the quality and the sustainability of the operations.