Yatani says basic items to be excluded from tax reviews

basic commodities

Kenyans will soon be shielded from high prices of basic commodities due to tax reviews that cater for inflation.

Photo credit: File | Nation Media Group

Kenyans will soon be shielded from high prices of basic commodities due to tax reviews that cater for inflation.

This follows Treasury Cabinet Secretary Ukur Yatani’s proposal Thursday to empower Kenya Revenue Authority (KRA) to exclude such products from inflation adjustments.

This means that KRA will not touch some products while reviewing taxes due to inflationary effects, one of the causes of increase in taxes for basic commodities.

While delivering the 2022/23 budget yesterday, CS Yatani proposed to empower KRA commissioner-general, Githii Mburu, to exclude such products after considering prevailing economic circumstances.

Inflation adjustment

“The Excise Duty Act provides for annual inflation adjustment of the specific duty rates on all products. However, it has been observed that the adjustment may not always be appropriate for some products, depending on economic and social environment facing them at that time. To address this, I propose to empower the commissioner-general of KRA to exclude, from inflation adjustment, such products after consideration,” Mr Yatani stated.

He noted that Kenyans had complained of high cost of living that was punishing many.

Prices of food and other household products used by millions have been increasing over the past months due to inflationary effects.

“While we celebrate remarkable achievements from the past investments in the priority programmes under the Economic Transformation and the “Big Four” Agenda, the country continues to grapple with various social, economic and environmental challenges. In preparing this year’s budget, we extensively consulted Kenyans: their insightful comments and suggestions have informed the priorities laid in this budget. Key among the concerns are: one, the high cost of living; two, high level of unemployment among the youths; three, income inequality; and four, public debt burden,” the CS stated.

Amend Excise Duty Act

He also proposed the amendment of the Excise Duty Act to exempt from excise duty eggs for hatching imported by licensed hatcheries, noting that last year’s introduction of the tax had adversely affected the hatching business. This is expected to increase eggs availability and eventually lower their prices.

“In the bill, I have also proposed to increase the specific rates of excise duty for a number of products by 10 percent to generate additional revenue for the government. Given the recent global increase in oil prices, I have excluded petroleum products from this increase,” Mr Yatani stated.