Cars, beer, cigarettes, juices and water will cost more from Saturday after MPs failed to marshal the numbers needed to reject President Uhuru Kenyatta’s proposal for higher taxes on the items.
The lawmakers on Wednesday failed to marshal the two thirds majority (233 MPs) needed to overturn President Kenyatta’s memorandum rejecting lower taxes proposed by the National Assembly’s Finance, Planning and Trade committee.
There were only 91 MPs present in the House at the time the Mr Kenyatta’s recommendations were being debated and voted on.
“We cannot vote on honourable Benjamin Lang’at’s (Committee chairman) proposed recommendations to reject the President’s recommendations. You don’t have the numbers. We will only proceed with the consideration by the President to delete the clauses on fruit juices, cigarettes and used cars,” temporary speaker Moses Cheboi ruled.
The President’s proposed higher taxes are contained in a memo to MPs following his rejection of the Bill passed in Parliament lowering duty on the goods, arguing that the lawmakers’ move would make it difficult to raise an additional Sh25 billion from the items.
The higher taxes were introduced by Treasury secretary Henry Rotich in June to cater for the current year’s budget. Leader of Majority in the National Assembly Aden Duale said the law could be assented to by Friday, setting the stage for price reviews.
The Treasury slapped a Sh200,000 excise tax on all vehicles more than three- years- old from the date of first registration and Sh150,000 on newer vehicles.
This adjustment replaces the existing 20 per cent excise tax based on a vehicle’s value, which is charged alongside customs and value added tax.
MPs backed a Bill that lowered the tax to Sh150,000 for newer vehicles and Sh100,000 for those more than three years old. This means that cars below Sh1 million will cost more.
Motorcycles will also attract excise tax at Sh10,000 a unit, hitting the boda boda business hard. MPs had dropped the tax on motorcycles.
Cigarettes, which are currently taxable at the higher rate of Sh1,200 per 1,000 sticks (mille) or 35 per cent of the retail sales price, will see the rate more than double to Sh2,500 per mille.
On fruit and vegetable juices, President Kenyatta rejected House proposals to remove a Sh10 per litre tax.
Beer will attract a flat tax of Sh100 per litre. Currently, a litre is charged the higher amount of between Sh70 and 50 per cent of the ex-factory price.
This means the taxes go up a minimum of 42 per cent. Water will attract a tax of Sh10 per litre, up from Sh3.