Losers and Gainers: Proposed 10pc excise duty increase on fuel shelved

fuel

There will be reprieve at the pump after the government spared fuel from the proposed 10% excise duty increase on unnamed commodities as the government explores ways to finance the record high Kshs. 3.31 trillion budget.

This comes amid rising pump prices which have soared in the last year coupled with shortage that has persisted for two weeks now.

According to the Kenya National Bureau of Statistics (KNBS), retail price for a litre of kerosene, petrol and diesel have risen 5.8%, 9.6% and 7.3% respectively within one year to March 2022.

“In the Bill, I have also proposed to increase the specific rates of excise duty for a number of products by 10 per cent to generate additional revenue for the Government. Given the recent global increase in oil prices, I have excluded petroleum products from this increase,” said CS Yatani.

Fuel subsidy programmes and other measures to cushion the populace from high fuel prices globally are likely to continue until the global prices stabilise.

National Treasury Cabinet Secretary Ukur Yatani announced that the government would also spend Kshs. 2.7 billion on subsidising fertiliser in efforts to enhance food production.

Locally assembled vehicles could be cheaper after the CS exempted locally manufactured passenger motor vehicles from VAT on their inputs and raw materials in what CS Ytani says is aimed at encouraging investment in the sector and enhancing competitiveness of locally manufactured passenger motor vehicles.

This will speed up the implementation of Bus Rapid Transport which has been allocated Kshs. 1.2 billion.

To further reduce the cost of poultry products that have seen tray retail at about Kshs. 360, the government has exempted imported eggs for hatching from exercise duty.

This will see the poultry industry increase its capacity for hatching eggs boosting the production of poultry products in the country.

Notable gainers also include manufacturers of neutral spirit used to manufacture pharmaceutical products who have now been exempted from paying excise duty upon approval by the Commissioner-General of KRA.

To reduce the cost of intensive healthcare, the government has exempted medical oxygen, plant and machinery used by manufacturers of pharmaceutical firms.

“To further reduce the health care cost, I propose to exempt from VAT medical oxygen supplied to registered hospitals, urine bags, adult diapers, artificial breasts, and colostomy or ileostomy bags for medical use,” said CS Yatani.

Treasury has also proposed exemption of inputs and raw materials imported by manufacturers of pharmaceutical products from payment of Import Declaration Fees and Railway Development Levy in a move aimed at attracting investment in the health sector and improving access to affordable health care services.

Livestock farmers and exporters of raw hides have also gotten a reprieve after the treasury proposed to reduce the export levy on the raw hides and skins from 80% or $0.5 per Kilogram to 50% or $0.32 per Kilogram.

Losers

Kenyans are also likely to witness a further increase in the cost of living following a proposal by the National Treasury to increase excise duty on some unnamed commodities whose details remain scanty.

Although Yatani did not go into specifics, he said the move is expected to generate additional revenue to fund this year’s budget.

“Mr. Speaker, the proposed measures contained in the Finance Bill, 2022 are expected to generate an additional Kshs. 50.4 billion to the exchequer for the FY 2022/23 budget,” he stated.

The media and firms involved in gaming activities are also likely to feel the pinch after National Treasury Cabinet Secretary Ukur Yatani introduced a 15% excise duty on gaming and alcoholic adverts.

It is now a big blow to the over 1.2 million boda boda and tuk tuk riders, perhaps the biggest casualties for they will now be required to take an insurance cover for passengers.

The media, brewers and gaming companies have also been slapped with an excise duty of 15% on advertisements for alcoholic beverages, betting, and gaming activities to discourage the promotion of these products and activities.

The CS proposed changes in the taxation regime for liquid nicotine used to make e-cigarettes noting that the design of these products and their taxation regime make them easily accessible to users including school children and the youth.

Expatriates will also be taxed gains made from financial derivatives.

  

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