Smokers and consumers of selected alcoholic beverages, who are already grappling with higher prices effected from July, can expect to pay more for the products after Parliament’s Finance Committee resolved to increase taxes Treasury had proposed in the 2019/20 budget.
Also not spared are gamers, who have been hit with a 20% excise tax on the amount they place as bets, against the 10% that had been proposed by Treasury in the 2019 Finance Bill.
Originally, the Government had proposed to levy taxes on winnings but this ran into a wall of resistance from betting firms, a number of whom are presently out of business after the State declined to renew their operating licenses in an ongoing tax dispute.
Treasury had proposed to increase excise tax levied on spirits to Ksh.242 per liter, but the committee proposed a Ksh.253/litre levy, white wines will be taxed at Ksh.189/litre, up from the suggested rate of Ksh.181/litre. Cigarettes with filters will be taxed at Ksh.3.16/stick, up from the proposed Ksh.3.03.
In July, alcohol and cigarette prices rose by 5.17% after the annual automatic inflation-adjustment was effected. The new prices will be effected soon after the whole house votes to adopt the committee’s report, which will then have to be signed into law by the President.
The new taxation measures are aimed at raising resources to fund the Government’s Ksh.3.1Trillion budget; – however, some analysts have warned that the targeted revenue may not be achieved given the poorly performing economy characterized by declining purchasing power, which may force consumers of the products cut down on consumption or resort to cheaper substitutes.