New Tax Proposal on Commodities Will Hurt Kenyans More – Kenyans.co.ke

On Thursday, May 12, a couple based in Mombasa County was on the spot after it was arrested for stealing a bale of flour meant for their three children to avoid starvation. 
When presented before Senior Resident Magistrate Vincent Adet, the couple confessed to the offense and pleaded with the judge for leniency on humanitarian grounds. 
Instead of instituting punitive measures against the couple, the judge turned the court into a fundraising drive in a bid to help the family. 
The particular case reflects the current situation that faces many Kenyans who are being pushed to the brink of poverty as they struggle to survive. 
The latest report by the National Drought Management Authority (NDMA) revealed that 3.5 million Kenyans were facing starvation by the end of April 2022- an increase of 400,000 as opposed to February.
The Kenyan economy is on the ropes with Kenyans grappling with severe issues such as the high cost of living, high level of unemployment among the youth, income inequality and the public debt burden that has forced Kenyans to live in unprecedented times. 
This indicates the grave danger that the country is tilting toward as it pushes its citizens to insurmountable lengths. 
The situation, which may seem bleak already, will soon become worse as indicated by the fiscal policies implemented by the government.  
For Kenyans, who elect Members of Parliament to advocate for their interests, they hold the key to either approving or rejecting a bill that would tilt the scales to a downward trajectory.
Despite grappling with the current state of living, Kenyans will have to face an increased level of unemployment, the fuel crisis, a rise in the cost of basic foodstuff such as cooking oil, a weak currency in the forex market and an increased cost of credit should the Finance Bill pass. 
The parliamentary finance committee is currently deliberating on the Finance Bill 2022 which is currently undergoing public participation.
The bill, which was tabled on April 12, 2022, seeks to increase various tax statutes in a bid to generate an additional revenue target of Ksh50.4 billion. 
Part of the proposals indicates a rise in excise duty of commodities such as motorcycles, cosmetics and beauty products, jewelry, beer, wines and spirits, sodas, chocolate and bottled water. 
To put it into perspective, the duty on a motorcycle unit will be raised to Ksh13,403.64 per unit – a 10 percent increase from Ksh12,185, while alcohol products are set to go up by 10 percent and spirits will rise by 20 percent.
Beer is the primary consumer of barley produced in Kenya hence farmers will be forced to cut down on production or incur significant losses should the MPs pass the bill. 
The latest KNBS data has demonstrated that there has been a 6.5 percent decline in barley production in the last ten years which has affected farmers in various areas such as Narok, Meru, Uasin Gishu and Nakuru counties
The excise duty imposed on glass, both imported and locally made, will go up by 25 percent while that of advertising fees will rise by 15 percent should Parliament approve the bill. 
The Commissioner-General of the Tax Authority will also be granted powers to decide on those exempted from the new tax rates. This brings about a conflict of interest for the senior boss whose mandate is to collect taxes. 
Further, businesses that have tax disputes will be most affected should the bill pass into law as one of the proposals includes charges of a 50 percent deposit of the disputed amount should they appeal their cases to an upper apex court. 
This consequently discourages business persons from seeking judicial redress, if they feel dissatisfied with the decision. 
To add to the woes, those who sell an asset that has gained in value will be required to pay an increase of tax by 10 percent, further forcing businesspersons to dig deeper into their pockets. 
Inevitably, excisable products will become more expensive leading to a rise in the Consumer Price Index (CPI), which determines a country’s inflation rate. 
The increase in taxes will ultimately lead to the loss of jobs for the lower and middle-class sectors; including farmers, boda boda, factory workers and those in the hospitality industry who benefit from the sale of excisable goods. 
This will force businesses to scale down in operations and hence lay off workers in order to cut costs. This can inevitably lead to the closure of some manufacturing industries. 
Despite the government’s narrative to Buy Kenya Build Kenya, the bill will lead to businesses opting for exports as opposed to escape high production costs in the market. 
Past media reports indicated that oil marketers prefer contraband alcohol products from Uganda and Tanzania. 
When local taxes are increased, cheap and illegal alternatives to excisable goods find their way into the market and hence continue to impact society negatively by consumption of harmful products. 
The key focus of the country should be on reducing the prices of commodities hence a petition should be drafted to challenge Parliament against passing such a bill.

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