Beer, cigarette taxes hidden in excise Bill raise uncertainty
Treasury secretary Henry Rotich has chosen to wait for Parliament to enact a Bill that is set to increase excise taxes on products like wine, beer, spirits and tobacco, leaving consumers and producers of the products in a state of uncertainty. PHOTO | FILE
What you need to know:
Mr Rotich, for the second year running, failed to adjust sin taxes on Budget day but urged MPs to pass the Excise Tax Bill (2014), which will introduce a raft of new taxes from which the government hopes to raise Sh25 billion.
The new law will, however, drop excise tax on bottled water from the current rate of three shillings per litre or five per cent of the retail sales prices, whichever is higher.
Treasury secretary Henry Rotich has chosen to wait for Parliament to enact a Bill that is set to increase excise taxes on products like wine, beer, spirits and tobacco, leaving consumers and producers of the products in a state of uncertainty.
Mr Rotich, for the second year running, failed to adjust sin taxes on Budget day but urged MPs to pass the Excise Tax Bill (2014), which will introduce a raft of new taxes from which the government hopes to raise Sh25 billion.
The proposed law, which has been tabled in Parliament, will see harmful products like cigarettes, alcoholic beverages, sugar-sweetened beverages and polluting fossil fuels and non-biodegradable plastic bags charged based on their weight.
Excise duty on motor vehicles and motorbikes has also been introduced in the proposed law based on their age, in a development that will drastically alter the excise tax landscape once its enacted.
“I expect to raise additional revenue amounting to about Sh25 billion from the various measures underpinning the new excise duty law,” said Mr Rotich.
“I therefore urge honourable members to consider prioritising this Bill for debate along with other Bills I am tabling before this House today (Thursday).”
The new law will, however, drop excise tax on bottled water from the current rate of three shillings per litre or five per cent of the retail sales prices, whichever is higher.
Mr Rotich said manufacturers of beer from sorghum, millet and cassava stand to gain a higher tax remission, coming weeks after President Uhuru Kenyatta enacted a law extending this relief from 50 per cent to 90 per cent.
The Economic Survey 2015 shows that the government earned Sh18.99 billion from excise duty levied on beer last year, a 13 per cent increase from the previous year’s Sh16.8 billion.
The government collected excise tax amounting to Sh4.6 billion from wines and spirits, Sh245.3 million from mineral water, Sh10.28 billion from cigarettes and Sh2.7 billion from other commodities.
The total excise duty revenue was Sh36.88 billion, representing a 11.2 per cent growth from the previous year’s Sh33.16 billion.
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