Ugali Lovers To Feel The Heat As Prices Increase By 4-8 Shillings

Kenyan households might be heading towards tougher times if the proposed 8 percent increase on VAT will be implemented leading to an increase in the price of a 2-kilogram bag of Unga by 4 or 8 shillings.

The move to increase Unga prices was passed last week when the United Grain Millers Association met in Nairobi

Small-scale millers make up 70 percent of the milling capacity in Kenya. Large-scale millers under the Cereal Millers Association make up 30 percent.

Just recently, the Cereal Millers Association issued a notification of price increase for maize and wheat flour due to the recent surge in the cost of production.

Chairman Mohamed Islam said with the introduction of VAT on fuel, transportation costs will increase twofold.

According to the millers, they have to absorb costs from the grain handling facilities to the millers and from the millers to the retailers thus the newly introduced VAT on fuel will have an additional ripple effect on the cost of electricity, packaging and other costs of production.

On Friday last week, President Uhuru Kenyatta returned the Finance Bill 2018 to the National Assembly with a new proposal to have the VAT slashed from 16 percent to eight percent.

Members of Parliament are divided over the new taxation and cost-cutting proposals pushed by the President and they are set to meet on Thursday to continue with the discussion.

Many want to overturn the President’s proposal for an eight percent levy and revert to the initial bill that set VAT at 16 percent — suspended until 2020.

The supplementary budget estimates are expected to contain wide-ranging spending cuts on non-priority areas such as hospitality, seminars, foreign and domestic travel that the President hopes will help to plug the financing gaps in this year’s budget.

Millers will be meeting with the Cabinet Secretary of Agriculture Mwangi Kiunjuri this week to discuss more on the impact of VAT increase.