Gas, Flour, Dairy Product Prices To Skyrocket In New Tax Proposals

Kenyans should prepare to spend more on gas, milk, meat, maize flour wheat flour, and eggs if a proposal to move the basic commodities from the zero-rated to the tax-exempt category goes through.

The tax measures are awaiting Parliament’s approval which if it happens will see the measures take effect in July with their purpose being to provide for the 2020-21 budget.

The zero-rated commodities are those that are basic for survival in a Kenyan urban resident and moving them from zero-rated means the government will begin to tax their sale.

If a good or business is tax-exempt, the government does not tax the sale of the good but producers cannot claim a credit they pay on the inputs which result in a higher cost of production which manufacturers have always passed on to consumers.

A gas which is currently going for an average of 2000 shillings for a cylinder of 13 kgs is also set to cost more as it has been moved from
the old rate of tax-exempt to the 14 percent VAT bracket.

The increase in prices of basic commodities according to the proposal is to raise funds to finance President Uhuru’s projects under the Big Four Agenda as the COVID-19 outbreak has strained the budget for these projects.

This comes as a majority of Kenyan s households are struggling to place a meal on the table following massive retrenchment and unpaid leaves even as the country continues to chock in debt with 904 billion shillings already set aside to repay them in the 2020-21 financial year.

The proposed tax changes are contained in the Finance Bill 2020 that is tabled in the National Assembly awaiting approval.
Animal products such as meat, milk, and eggs will cost more as the tax proposal proposes the taxation of inputs used in the production of animal feeds.

It remains to be seen whether the legislatures will indeed approve the tax proposals given the current difficult situation amongst a majority of Kenyans.

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