Excise Duty on Beer, Water to Increase By 6.3% From October 2022

By Lynnet Okumu / Published September 20, 2022 | 11:59 am

KEY POINTS

Data from the Kenya National Bureau of Statistics paints a vivid picture of the pain Kenyan consumers have endured since the year began, with the stagnant and falling incomes struggling to keep pace with the rising prices of goods and services.

According to the Kenya Revenue Authority (KRA), the prices of some goods, including beer, bottled water, and juice might increase come October, due to annual inflation tax adjustments of up to 6.3 percent.

“The specific rates will be adjusted using the average inflation rate for the financial year 2021/2022 of six decimal three per centum (6.3percent), as determined by the Kenya National Bureau of Statistics, and the adjusted specific rates will be effective from October 1, 2022,” stated the KRA.

Possible Effect of the Adjustments

The effect of the increase will be felt by consumers in the country. Manufacturers of the products will pass on the additional cost of the commodities to end users.

This means that most Kenyan households are yet to recover from the effects of the Covid-19 pandemic, as well as other domestic factors such as inflation, will continue facing tough economic times.

Even though the adjustment is in line with the law that demands excise duty to be revised upwards in tandem with the cost-of-living measure, various lobbies, since 2020, have consistently urged the taxman to pause implementation of the annual inflation adjustment tax.

The groups have stated that this move affects excisable goods, thus causing more economic hardships to Kenyans who are already facing several other challenges.

In the budget read in June 2022, the government also introduced new taxes on basic commodities such as cooking gas, further squeezing the budgets of many households.

The KRA had on November 2 raised the duty charged on the products, including bottled water, juice, motorcycles, and beer, by 4.97 percent to cover the inflationary erosion of collected taxes. But this move was subsequently stopped by a court ruling.

In December 2020, the taxman increased the cost of 30 products by at least 5.43 percent prompting protests from traders including distributors of alcoholic drinks.