Economy

KRA sets date for new taxes on beer, water and boda boda

water

A water and juices section in a Supermarket. FILE PHOTO | NMG

The prices of over two dozen goods, including beer, bottled water and juice, are set to rise from this month after the Kenya Revenue Authority (KRA) moved to effect annual inflation tax adjustment on excise duty charged on the products.

The taxman Tuesday indicated excise duty on the products will increase 4.97 percent effective November 2 in line with average annual inflation. Pricewaterhouse Coopers (PwC) had on Tuesday warned of possible confusion over the effective date of the legal notice.

The increase will see manufacturers pass on the additional cost of the commodities to end users in what may further stoke public outrage over the high cost of living.

Most households are yet to recover from the effects of the Covid-19 pandemic, which triggered layoffs, pay cuts and business closures.

“KRA would like to inform manufacturers and importers of excisable goods and the public that the rates of excise duty on excisable goods that have a specific rate of duty have been adjusted using the average inflation rate for the 2020/2021 financial year of 4.97 percent as required under the section 10 of the Excise duty Act 2015,” said the KRA in a notice on Tuesday.

“The adjusted rates are provided under legal notice Number 217 of 2021 and are effective from November 2.”

The adjustment is in line with the law that demands that excise duty be revised upwards in tandem with the cost of living measure or the average rate of inflation in the 12 months through June.

Industry lobby Kenya Association of Manufacturers (KAM) had consistently urged the taxman to pause implementation of the annual inflation adjustment tax that affects excisable goods, citing economic hardships as a result of the Covid-19 crisis.

Before 2018, the affected goods had fixed excise rates, and the new inflation adjustment is seen as a means of protecting the government’s spending power from being eroded by the rising cost of living.

Last year, the taxman increased the costs of the products by at least 5.43 percent, a blow to consumers hurt by job cuts and unpaid leave in the wake of the Covid-19 pandemic.