Kenyans face more pain as prices increase, again

Tuesday, October 4th, 2022 07:30 | By
Shoppers at maize flour shelf at a supermarket in Kitengela town. PD/ CHRISTINE MUSA

Kenya Revenue Authorities’ (KRA) move to raise Sh3.7 billion in additional revenue from inflation-adjusted taxes has come to haunt households in form of higher commodity prices.

Consumers are staring at more costly bottled water, soft drinks, cigarettes, alcohol, fuels, and motor vehicles as taxman implements the adjustment of excise tax.

The Excise Duty Act 2015 proposes an adjustment in excise duty every year in consideration of the cost of living.

However, in what would come as a little relief to Kenyans, the taxman announced that fuel will be excluded from the list of excisable products to be affected.

Commissioner General Githii Mburu said KRA would not implement the 6.3 per cent inflation adjustment on excise duty on petroleum products.

Cost of fuel

Mburu disclosed that a Leaver Notice had already been sent out for publication to effect the same, explaining that a further increase in the cost of fuel would have a ripple effect on that of other commodities.

“The only other category we are going to leave out are petroleum products because of the current high costs of fuel. We want to support Kenyans to ensure that that price does not go higher,” he said in a statement yesterday.

However, Mburu noted that the increased charges on all other products took effect on October 1, as announced in an earlier notice published by the taxman.

Other products targeted include telephone and Internet data services, fees charged for money transfer services, and other fees charged by financial institutions.With the adjustments the excise duty will see the price of a bottle of water go up from Sh6.6 per litre to Sh7.02 while juice sellers will part with Sh14.14 for every 12 litres up from Sh13.3.

Tea is also expected to become more expensive as sugar confectionery taxes have risen from Sh40.3 for every 36 kilos to Sh42.9. Catching up for an evening out with friends will now see KRA demand Sh142.4 for every two beer bottles or a litre of your favourite drink up from Sh134 and Sh4.06 for filtered cigarettes up from Sh3.82. A spot-check across various sectors shows that even the commodities that don’t attract the excise tax are now recording price increases as Kenyans adjust to the inflationary pressures.

Businesses such as barber shops, Spa and salons are now either reducing the services or increasing costs in-line with the economy’s performance.

Inflation adjustment

Consumer goods companies are, however, putting up a fight against inflation adjustment on excise duty.

Kenya Association of Manufacturers who have also fought the adjustments have stated that over the years, the annual inflation adjustment has not yielded increased tax revenues.

Kenyans are already experiencing the sharpest rise in the cost of living recorded in more than five years, with the crisis largely hitting the energy, food, housing and transport sectors amid a weakening shilling.

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