Consumers feel more pain when KRA adjusts excise duties
Fuel, alcohol and soft drinks are set for another round of price hikes as KRA prepares to introduce inflation adjustments to various excise goods and services from October 1.
The tax authority wants to increase the fixed rate of excise by 6.3 percent, which represents the average rate of inflation recorded in the last financial year 2021/2022, to reduce government revenue due to import inflation.
This will show the tax rate. super petrol will increase to Sh22,878.60 per liter of product from the current level of Sh21,953.02. The new diesel price is Sh4,339.95 per litre, compared to Sh4,082.74 previously. Jet fuel will now charge Sh23,336.06 per 100 litres.
Other products targeted for tax violation are cigarettes and nicotine products, SIM cards, motorbikes, fruit juices, bottled water and sweets.
“The Commissioner General must fix the inflation rate in accordance with the formula set out in Part 1 of the First Schedule to the Act effective from October 1, 2022,” KRA said in its latest draft inflation adjustment statutory notice.
Inflation-adjusted prices for the 2021/2022 financial year, for example, still and non-alcoholic fruit juice will see an increase in excise duty from Sh13.3 to Sh14.4.
Bottled water or soft drinks including bottled water and juices will attract Sh6.41 in excise duties, up from Sh6.03.
Beer, cider, beer and other fermented drinks will see their excise duties increase from Sh134 to Sh142.4.
Cigarettes, imported white chocolate, imported motorcycles, nicotine and tobacco will also attract VAT. KRA has come under fire for using some prohibited products to increase tax revenue, and rising inflation, Kenyans have never broken in the cost of basic household goods. 8.5 percent in August and 8.3 percent in July.
Data from the Kenya National Bureau of Statistics said this month’s high inflation was driven by rising food prices as the food and soft drinks index rose 15.3 percent year-on-year.
Communication and housing costs increased by 7.6 percent and 5.6 percent respectively, while two-month expenses, together with food, contributed to 57 percent of the monthly household budget.
The excise tax amendment is in line with the Finance Act 2015, which gives tax authorities the power to change tax rates higher in line with official inflation records.