If chocolates are your guilty pleasures, brace yourself for higher prices as President Uhuru Kenyatta seeks for funds to fill his huge budget hole.
The president has proposed a Sh20 excise duty for every kilogramme of confectionery sugar .
The sweet tooth tax is one of the proposals contained in his memo to parliament as part of raising revenue.
Treasury Secretary Henry Rotich on Tuesday told Parliament’s Finance Committee that the government wants to fight obesity as it seeks to increases revenue.
“You’re complaining about this tax while the country is spending more on obesity. That was the rationale we used when we decided to control the problem through taxation while also increasing government’s revenue,” said Rotich.
Also affected by the confectionery excise duty are sweets, candied nuts, chewing gums and bubble gums.
In June, confectionery and chocolate product manufacturing companies moved to court to challenge the proposed financial regulations as well as the imposition of excise duty on their goods.
Five local companies sued the National Treasury, the National Assembly and the Attorney-General saying that the new tax rule was riddled with inefficiencies that need to be sorted over time.
The companies claimed that the Treasury Cabinet Secretary had already proposed the date when the new tax rule should take effect without any public participation carried out.
The companies are Candy Kenya limited, Kenafric Industries Limited, Kenya Sweets Ltd, Patco Industries Ltd and Mzuri Sweets ltd.
The Government is also going after Internet data, targeting close to 40 million mobile internet subscribers. Internet bundles will now be hit with an excise tax of 20 per cent. Bank transactions have also been targeted, as the Government is eyeing a share of the billions of shillings that are transacted every day through 54 million bank accounts, as listed by the Central Bank of Kenya. Besides charging 20 per cent excise duty on money transfer, up from 10 per cent, all other fees such as ATM withdrawals, depositing a banker’s cheque, over-the-counter withdrawals will attract an increased tax of 20 per cent, up from 10 per cent.
Little alternative Habil Olaka, the Chief Executive Officer of Kenya Bankers Association, said Kenyans have little alternative but to pay the new taxes. “Consumers might move to alternatives if they feel the tax is too expensive. But I don’t think the reduction in consumption will be significant,” said Olaka. He said reduction in consumption might not significantly reduce, as other alternatives have also gone up. Transfers on mobile phones and other bank charges will also go up. Poor families will feel the brunt of the new tax measures after the President proposed to charge importers Sh18 for every litre of kerosene, a revision from an earlier proposal by Treasury that stood at Sh10 per litre.
Six of every 10 households in rural Kenya use kerosene for lighting. The levy on kerosene will not simply affect the poor consumer but also manufacturing sector, whose resuscitation the President hopes will help create more than 800,000 jobs annually. “The proposal to introduce a special ‘anti-adulteration’ tax of Sh18 per litre of kerosene will negatively affect the manufacturing sector, particularly paint, resin and shoe polish manufacturers who use kerosene as a raw material,” said Job Wanjohi, Head of Policy, Research and Advocacy at Kenya Association of Manufacturers. Sweets, chewing gums, juices and chocolates and other confectionaries will be slapped with an excise duty of Sh20 per kilo. MPs had proposed to do away with this levy in the Finance Bill, 2018.