Kenyans To Pay KRA Ksh142 For Two Beer Bottles From October

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

For every two beer bottles, Kenyans will pay the taxman 142.4 shillings up from 134 shillings. KRA will collect up to 4.06 shillings for filtered cigarettes up from 3.82 shillings.

Meanwhile, the price of a bottle of water will go up from 6.6 shillings per liter to 7.02 shillings while juice sellers will give KRA 14.14 shillings for every 12 liters up from 13.3 shillings.

On the other hand, sugar confectionery taxes have risen from 40.3 shillings for every 36 kilos to 42.9 shillings.

Tax adjustments on wine will cost 243.4 shillings for every 208 liters up from 229 shillings, while that of spirits will go up to 356.4 shillings for 278 liters from 335 shillings.

“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.

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.

The inflated cost of these products will impact the purchasing power of the citizens in turn leading to consumers resorting to purchasing counterfeits and illicit which risk lives and deny the government the taxes they target to collect.

The consequences of the July 2022 tax increment are still felt across the country. It led to a decline in alcohol consumption and tax collection to Covid-19 period levels. Reduced consumption and the decline in grain production are poised to negatively impact sorghum and barley farmer incomes.

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 taxman had initially targeted 3.7 billion shillings in additional revenue from inflation-adjusted taxes for this fiscal year ending June 2022.

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

Moreover, the Kenya Association of Manufacturers has stated that over the years, the annual inflation adjustment has not yielded increased tax revenues as projected.

Data from the Kenya National Bureau of Statistics paints a clear 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.

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.

At a time when the cost of leaving is so high, inflation adjustment is to be lower and not increase tax rates according to lobby groups. Inflation adjustment has a dual meaning and should be exercised to create a win-win scenario for both government and private sector.

Currently, it has created a win-lose situation to the disadvantage of the industry and consumers.

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