Economy

KRA sued over new beer, fuel taxes

Fuel-total

A Total fuel station in Nairobi. FILE PHOTO | NMG

Summary

  • The Kenya Revenue Authority (KRA) is facing court opposition from increasing excise duty on at least 31 goods, including beer, fuel, bottled water, and juice from October 1.
  • Two Kenyans have petitioned court to stop the impending decision by the taxman to increase excise duty on the products by 4.97 percent in line with average annual inflation.

The Kenya Revenue Authority (KRA) is facing court opposition from increasing excise duty on at least 31 goods, including beer, fuel, bottled water, and juice from October 1.

Two Kenyans have petitioned court to stop the impending decision by the taxman to increase excise duty on the products by 4.97 percent in line with average annual inflation.

Mr Isaiah Odando and Mr Wilson Yata argue that the decision, which is slated to take effect on October 1, will put pressure on cost of living.

This will see manufacturers pass on the additional cost 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.

Consumers will pay Sh5.77 more for a litre of beer while the prices for spirits will rise highest at Sh13.20.

A litre of petrol will increase Sh1.09, pushing excise duty to Sh23.04 on the commodity, while diesel and kerosene will increase by Sh0.566 per litre each.

"KRA and the Energy & Petroleum Regulatory Authority have ignored proper public participation of Kenyans before adjusting the rates of Excise Duty using the average inflation rate for the Financial Year 2020/2021 of 4.97 percent, as determined by the Kenya National Bureau of Statistics contrary to Articles 10(2)(a),2(2) and 201(a) of the Constitution," reads the court papers.

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.

KRA will for the first time be required to get parliamentary approval to effect the new rates following changes to the law that came into effect last year.

Industry lobby Kenya Association of Manufacturers (KAM) has 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.

Other items that are set to attract higher taxation are cigarettes, bottled water and motorcycles (boda boda).

The price of one stick of cigarette will increase by Sh0.16 in line with the rise in excise tax from Sh3.31 to Sh3.47 while the duty on bottled water will rise from Sh3.31 to Sh3.47 per litre.