FINANCE BILL

MPs spare Unga, increase taxes on wines and spirits, beer

Boba Bodas and gas also spared.

In Summary

•MPs rejected a proposal to introduce VAT on the supply of maize and wheat flour.

•VAT on Liquefied Petroleum Gas (Cooking gas) has also been slashed to eight per cent from the current 16 per cent.

Flour products on display at a supermarket/
Flour products on display at a supermarket/
Image: FILE

Prices of wines and spirits and some beers are set for an increase after Parliament on Thursday night passed amendments to the Finance Bill 2022.

Wines will attract duty at the rate of Sh229 per litre from the current Sh208.20 once President Uhuru Kenyatta accents to the bill, which will become the 2022 Finance Act.

Spirits with an alcoholic per centage of more than 6% will attract excise duty at Sh335.30 per litre, up from Sh278.70.

For beer lovers, products whose alcohol content exceeds six per cent will attract excise duty at the rate of Sh134 per litre, up from Sh121.85, meaning retail prices are set to increase.

The rate of excise duty on powdered beer (Keg) has however been retained at Sh121.85 per litre.

Tobacco substitutes including non-combustible tobacco will from July 1, attract excise duty at Sh3,750, more than double the current Sh1,500.

MPs also amended the Finance Bill 2022 on advertising revenue drawn from alcoholic beverages, gaming, lottery , betting and prize competitions.

Excise duty on fees charged on advertisements by television stations, print media, billboard and FM stations these products is set at 20 per cent, up from 15 per cent.

Dagoretti South MP John Kiarie Waweru said: “The advertising tax that would be imposed here is not translatable to the consumer…..But most importantly the fact that we shall be able to be raising revenue out of betting advertising and fill up the gaps on some of the proposals that we have done is justification enough.”

The increases in taxes on alcohol revises earlier recommendations by the Finance and Planning Committee of the National Assembly, which had rejected a proposal by the National Treasury to increase these taxes.

The Homa Bay Woman Representative Gladys Wanga chaired committee had noted that an increase would lead to a rise in the consumption of illicit alcohol.

“Increase in excise duty on beer may increase uptake of illicit brew,” the committee Wanga had written in the report.

The Bar Hotels Liquor Traders Association (BAHLITA), which represents the industry, on Thursday said increased taxes will hit the industry, which is yet to come to terms with Covid related losses, where the number of bar outlets has reduced from 54,000 to 32,000 countrywide.

At least 110,000 jobs in the entertainment and hospitality sector have been lost in the process.

This represents Sh19.8 billion losses annually in household income for the hospitality industry.

The sector is also experiencing a high cost of doing business due to increased fuel prices and the increased cost of food due to external factors and high inflation, it says.

Further, high prices of alcohol will encourage the growth of illicit trade in the form of contraband and cheap raw spirit entry from neighbouring countries, BAHLITA secretary-general Boniface Gachoka said.

Manufacturers, under the Kenya Association of Manufacturers, had also told Parliament an increase in taxes will lead to a return of high consumption of illicit alcohol.

Meanwhile, households have been spared from a further increase in Unga prices as MPs rejected a proposal to introduce VAT on the supply of maize and wheat flour.

The commodities’ prices have already shot following shortages, with the wheat flour supply being affected by the Russia-Ukraine war.

VAT on Liquefied Petroleum Gas (Cooking gas) has also been slashed to eight per cent from the current 16 per cent.

Digital Services Tax (DST) has been retained at 1.5 per cent, fertilizers zero-rated while excise duty on bottled water and non-alcoholic beverages has been retained at Sh6.03 per litre.

Treasury has proposed to increase this to Sh6.60.

Boda Boda operators also have something to smile about as MPs held excise at Sh12,185 against the proposal to increase this to Sh13,403.

Locally produced chocolate has also been exempted with excise now applying only on imports.

“We only have two manufacturers..with this kind of excise they cannot be competitive,” Wanga told the floor of the house, albeit a near-empty House.

Elsewhere, property dealers will now pay more as Capital gains tax (CGT) moves from five per cent to 15 per cent.

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