Beer and cigarette manufacturers have protested to President Uhuru Kenyatta against National Treasury's proposal to raise excise duty on the products to 21 per cent.
They said the proposed tax, which Parliament approved last Wednesday, would impact negatively on the lives of thousands of Kenyans, including loss of jobs.
The manufacturers want the President to consider their proposal that sections of the Finance Bill 2019 are deleted.
MPs approved Treasury’s proposal – commonly known as sin tax – to charge duty of Sh12,624 per kilo of cigars, cheroots and cigarillos containing tobacco or tobacco substitutes.
The lawmakers also pegged excise duty on electronic cigarettes at Sh3,787 per unit, Sh2,525 on cartridge for use in electronic cigarettes and Sh3,157 for every mille of cigarette with filters (hinge lid and soft cap).
Cigarettes without filters (plain cigarettes) will attract a duty of Sh2,272 per mille should the President approve the bill.
Other manufactured tobacco and tobacco substitutes,'homogenous' and 'reconstituted tobacco' and tobacco extracts and essences would attract duty of Sh8,837 per kg.
Wines including fortified wines and other alcoholic beverages obtained by fermentation of fruits will attract duty of Sh189 per litre.
Spirits of undenatured ethyl alcohol, spirits liqueurs and other spirituous beverages of alcoholic strength exceeding 10 per cent will be charged duty of Sh253 per litre.
Uhuru is expected to assent to the bill any time this week to pave way for Treasury to enforce the tax measures.
But the products’ manufacturers lamented that the proposed legislation will undermine the government’s efforts to grow the manufacturing sector.
In a paid-up public notice, they argued that the efforts to raise sustainable revenues as well as the fight against illicit trade and tax evasion would be defeated.
They further argued that the approved excise rate of 21 per cent is higher than what was earlier proposed in the Finance Bill 2019 before amendment by Parliament.
The petition has been filed by BAT, Kenya Wine Agencies (Kwal), Alcoholic Beverages Association of Kenya (Abak) and Mastermind Tobacco.
They argue that farmers, retailers, wholesalers, distributors and other service providers–mostly SMEs, will be adversely affected by the increased tax.
The manufactures say MPs ignored their appeal for reconsideration of the taxes pointing out that they gave evidence past tax charges have not resulted in increased revenue for the government.
“The charges have instead led to the increased illicit trade in the respective industries,” the lot told Uhuru.
They reasoned that duty paid volumes for a number of excisable goods have been on the decline resulting in lower collections.
“Significant and unpredictable excise increases will not reverse this trend. By having the highest excise rates in East Africa, Kenya is already a haven for illicit cartels,” they said.
Their appeal is for the country to return to a predictable and moderate excise increase as the way out for the government’s clamour for more revenue.
Edited by R.Wamochie
