Survey; Tax rises will drive most Kenyans to illicit goods
The vast majority of Kenyans are likely to end up buying illicit goods if proposed new consumer taxes become law.
Almost two in every three respondents believe that the excise hikes are Government’s attempt to compensate for the Ksh.h153 billion annual fiscal hole created by illicit trade, while four in five say the rises will affect how they vote in the forthcoming national elections.
This is the public’s damning verdict on the Finance Bill, 2022 currently before Parliament, according to a nationwide poll of consumers conducted by lobby group Stop Crime Kenya (StoCK).
“Our latest survey highlights once more the worrying disconnect between policymakers and the grim reality of life for ordinary consumers, who are struggling to cope with the soaring cost of living.
“Tax increases threaten to drive increasing numbers of these honest, hard-working Kenyans to the illegal sector in search of more affordable goods. In so doing, citizens are put at risk from substandard and unregulated products, while criminals get rich and the Treasury is deprived of much-needed revenue,” says StoCK chairman Stephen Mutoro.
The Finance Bill proposes tax hikes on a range of everyday commodities including fruit juice, bottled water, ice cream, chocolates, cosmetics and beauty products, beer, wine and cigarettes.
These increases are in addition to a pending inflation adjustment, which has been held up by a legal challenge since November.
“This double price hike for Kenyans when they can least afford it threatens to backfire spectacularly, as our survey shows,” says Mutoro adding that “when consumers are driven to the illicit market, legitimate manufacturers and supply businesses are put under further pressure, leading to closures and job losses that perpetuate this vicious cycle.”