Water, beer, car prices up as new taxes take effect

The state has been experiencing a cash crunch that slowed release of funds for key development projects. PHOTO | BD GRAPHIC 

By NEVILLE OTUKI, notuki@ke.nationmedia.com

In Summary

• Beer is up Sh30 per litre, kerosene by Sh5.75 a litre, bottled water up by Sh7 a litre, juice is up Sh10 a litre while a charge of Sh10,000 will apply on motorcycles.
• The Excise Duty Act was to take effect after President Uhuru Kenyatta assented to it three weeks ago but the KRA was waiting for the legal notice.
• The government expects to raise an additional Sh25 billion from the new levies that Mr Rotich introduced in June to help fund his Sh2.1 trillion budget.

Consumers will from Tuesday pay more for beer, juices, water, second-hand cars and motorcycles after the Treasury set the date for application of new taxes on the goods.

Treasury secretary Henry Rotich has indicated in a gazette notice that the Kenya Revenue Authority (KRA) will start collecting the taxes from Tuesday.

Beer is up Sh30 per litre, kerosene by Sh5.75 a litre, bottled water up by Sh7 a litre, juice is up Sh10 a litre while a charge of Sh10,000 will apply on motorcycles.

“In exercise of the powers conferred by section 1 of the Excise Duty Act, the Cabinet secretary for the National Treasury appoints December 1, 2015 to be the date the Act shall come into operation,” said Mr Rotich in the gazette notice.

The Excise Duty Act was to take effect after President Uhuru Kenyatta assented to it three weeks ago but the KRA was waiting for the legal notice.

Treasury PS Kamau Thugge on November 20 attributed the delay to failure by Parliament to pass the Tax Procedures Bill empowering the taxman to charge the new levies.

The Bill, which is yet to be passed, provides for the creation of uniform rules to be used in the administration of value added tax, excise duty and income tax.

The proposed law aims to make it convenient for taxpayers to meet their obligations and reduce the burden caused by the existence of separate sets of laws for each of the taxes.

READ: MPs fail to stop Uhuru’s higher taxes on cars, beer, water, juice

Dr Thugge had, however, said talks were underway between the State Law Office and the KRA to pave the way for enforcement of sections of the excise law that are not grounded in the Bill.

The government expects to raise an additional Sh25 billion from the new levies that Mr Rotich introduced in June to help fund his Sh2.1 trillion budget.

The excise tax law puts the charge on imported vehicles more than three years old at Sh200,000 and Sh150,000 for newer ones — a departure from the existing 20 per cent duty charged on a vehicle’s value.

This means buyers of second-hand vehicles valued at below Sh1 million and newer cars below Sh750,000 will be hard hit in the new regime.

A used vehicle worth Sh800,000 will, for instance, be charged a levy of Sh200,000 as opposed to Sh160,000 based on the calculation of 20 per cent of its value.

On the flipside, the flat excise levy favours buyers of used cars valued more than Sh1 million and newer cars above Sh750,000 based on the flat fee of Sh150,000 for new cars