Kenyans to Start Paying More for the Following Goods and Services

Kenyans will now dig deeper into their pockets to buy alcohol, cigarettes, juices and cosmetics starting 1^st July 2022 as the government enforces new taxes to fund this financial year’s Sh3.3 trillion budget, further raising the cost of living.

The Act, which President Uhuru Kenyatta signed into law last week, has raised excise duty on many goods and services that the government considers harmful, luxurious or morally suspect by at least 10 percent.

The new consumption taxes, aimed at partly raising an additional 50.4 billion shillings in revenue, will add to a double-digit jump in food prices that have pushed the cost of living to a nearly five-year high.

“These taxes will make the cost of living high and reduce household disposable income. Life is going to be a bit difficult, Stephen Waweru, a senior manager for tax services at consultancy and audit firm KPMG, said.

“With consumption taxes, you can net almost everyone because people are collecting on behalf of the government. This, unlike the direct taxes [like income taxes] which one can avoid by deciding not to disclose your total income.”

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Consumers of spirits like whisky, gin and rum are the hardest hit, with duty per litre increases from 20.31 percent to 335.30 shillings after the House rejected a recommendation by Finance and Planning Committee to spare alcohol from higher taxes this fiscal year.

Beer duty has also increased by 9.97 percent to 134 shillings per litre, wines by 9.99 percent to 229 shillings per litre, while fruit and vegetable juices will increase 9.29 percent to 13.30 shillings. The committee sought to spare alcoholic drinks from the price raise because it will lead to increased consumption of illicit drinks.

Cigarettes with filters will be charged a duty of 3,825.99 shillings per mille from 3,447.61 shillings per mille, while cigarettes without filters will be charged 2,752.97 shillings per mille from 2,502.74 shillings per mille.

Imported chocolate, chocolate in blocs, slabs or bars of tariff will also cost more as duty has been increased to 242.29 shillings per kg from 220.31 shillings per kg

The cost of imported jewellery such as necklaces, earrings, bracelets and rings is also set to go up on a 15 per cent duty compared with 10 percent.

The MPs shot down the recommendation of the Budget Committee, chaired by Gladys Wanga, that sought to spare alcoholic drinks from further price increases on the grounds that it will increase consumption of illicit drinks at a time most households are grappling with the soaring cost of living amid stagnant salaries.

“These taxes are increasing the cost of living both for middle-class and even the low-income households who will pay more even when they take Fuliza (Safaricom’s overdraft facility),” said Philip Muema, a partner at a tax and business advisory firm, Andersen Kenya.

“This is absurd in an election year where you expect a bit of leeway from the government. But the government of the day is taking leave.”