Manufacturers want KRA to shelve inflation adjustment on specific rates of excise duty
The Kenya Association of Manufacturers (KAM) now wants the Kenya Revenue Authority (KRA) to halt the implementation of inflation adjustment on specific rates of excise duty set to take effect on October 1, 2021.
According to Job Wanjohi, the head of policy research and advocacy at KAM, the annual inflation adjustment has rendered locally manufactured goods less competetive effectively flooding the market with illicit products from neighbouring countries.
Speaking to Metropol TV, Wanjohi said there is a need for the government to set a limit to how much adjustment can be made if Kenya is to compete with her peers.
The taxman has already announced that excise duty on select products will increase 4.97 percent in line with average annual inflation.
The new taxes will affect the prices of at least thirty-one goods including beer, fuel, bottled water and juice.
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“Kenya Revenue Authority would therefore like to inform manufacturers and importers of excisable goods falling under the specific rate category and members of the public that the Commissioner-General will adjust the rates of Excise Duty using the average inflation rate for the Financial Year 2020/2021 of four decimal nine seven per centum (4.97%), as determined by the Kenya National Bureau of Statistics. The adjusted rates will be effective from 1st October 2021.”
Consumers will therefore have to dig deeper into their pockets as manufacturers will pass on the additional cost of the commodities to end-users.
The net effect of this will be more economic strain on Kenyans who are grappling with the high cost of living, occasioned by the ever-rising tax burden.
Most households are also feeling the effects of economic fallout caused by the COVID-19 pandemic that wiped livelihoods by eating up jobs, killing businesses and sending the economy into a coma.
The adjustment is in line with the law, which demands that KRA revises excise duty upwards in line with the cost of living measure in the 12 months through June.
KAM is protesting this move saying the annual inflation adjustment has rendered locally manufactured goods less competitive effectively flooding the market with illicit products from neighbouring countries.