Millions of the growing cosmetic industry clientele, alcohol, cigarettes and fruit juice consumers face high prices in the coming weeks as the government, in chasing more revenues, proposed more taxes.
The National Treasury has set its eyes on at least 14 categories of excisable goods in new tax proposals, with the four – consumed by millions of Kenyans daily – topping the list of products it is proposing to increase excise fees on by up to 316.7 per cent.
In the Excise Duty (Excisable Goods Management System) (Amendment) Regulations, 2023, consumers of cosmetics and beauty products will now pay Sh2.5 for an excise stamp up from Sh0.6, cigarette and alcohol users Sh5 from Sh2.8 and fruit juices Sh2.2 from Sh0.6, Treasury proposes .
An industry that has grown by over Sh10 billion over the past decade, the cosmetics and beauty products consumers will be the most hit under the new proposals, with the proposed 316.7 per cent excise stamp fee increment.
The move shows the new government’s interest in the sector, which has recorded fast growth as millions of Kenyans grow interest in using cosmetic and beauty products, with official data showing that imports of essential oils and perfumes alone rose from Sh21.9 billion to Sh26.3 billion between 2017 and 2021.
“In compliance with the Statutory Instruments Act, and on behalf of the Cabinet Secretary, the National Treasury and Economic Planning, the Commissioner General invites interested members of the public and stakeholders to submit their inputs and comments for consideration in the finalising of the above regulations,” the Kenya Revenue Authority (KRA) stated yesterday as it released the proposals.
Kenyans are expected to provide their views on the proposals by February 3, with the new taxes planned to be charged effective March 1, 2023.
Cigarette and alcohol users are about to be hit again with the 78.6 per cent proposed excise stamp fee increment following another increment in the Finance Act, 2022. This could see prices rise further, much to the disappointment of consumers.
Alcoholic beverages such as wines and compounded spirits of alcoholic strength exceeding 6 per cent, will be charged Sh5 up from Sh2.8 also, while beers will be charged Sh3 per stamp, double the Sh1.5 they were charged.
In the Finance Act, 2022, Treasury increased excise duty on beauty and cosmetic products by 15 per cent, fruit and vegetable juices by 10 per cent, wine and beer 10 per cent, and 20 per cent on spirits.
And while traditionally excise taxes were meant to be applied on products harmful to human health such as alcohol and cigarettes, with the expected impact of deterring users from using them, KRA’s has evolved in the recent years to include more product categories.
In the new proposals, KRA also listed fruit and vegetable juices among goods the government is looking to raise more revenues from, raising excise stamp fee by 266.7 per cent to Sh2.2 per stamp.
This is also likely to have an impact on prices of the products , with businesses seeking to recover costs by passing the same on to consumers. Excise stamp fee on bottled water will, however, be retained at Sh0.5 per stamp, while other non-alcoholic beverages will be charged Sh2.2 per stamp, up from Sh0.6.