Kutuny seeks to stop Sh4bn non-alcoholic drinks sin tax

Cherangany MP Joshua Kutuny addressing journalists at Parliament in Nairobi. PHOTO | DIANA NGILA | NMG 

In Summary

• The taxman, which in May won a protracted case at the Court of Appeal, plans to roll out its Excisable Goods Management System (EGMS) on August 1 pending determination of a case at the Supreme Court.
• Mr Kutuny, however, wants the National Assembly’s Public Investment Committee (PIC) to delay the taxes until a forensic audit and the Supreme Court case are concluded.
• He says the levies are unconstitutional and would be a massive public rip-off

By LYNET IGADWAH
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The Kenya Revenue Authority (KRA) faces another barrier in its effort to collect Sh3.6 billion in excise tax on cosmetics, bottled water and other non-alcoholic drinks after Cherangany MP Joshua Kutuny petitioned Parliament to stop the process.

The taxman, which in May won a protracted case at the Court of Appeal, plans to roll out its Excisable Goods Management System (EGMS) on August 1 pending determination of a case at the Supreme Court.

Mr Kutuny, however, wants the National Assembly’s Public Investment Committee (PIC) to delay the taxes until a forensic audit and the Supreme Court case are concluded.

PIC is currently investigating the award of the Sh17 billon Excisable Goods Management Systems (EGMS) contract to Swiss firm SICPA Solutions.

It launched investigations into a clause in the tender documents that requires manufacturers of excisable goods to pay the Swiss firm Sh1.50 for every stamp attached on an item.

Mr Kutuny said the levies are in breach of provisions of the Constitution and would be a “massive rip-off of public resources”.

“As a person elected to represent the interest of the people, I demand that the Treasury immediately puts on hold forthwith the implementation of the EGMS until Parliament, through PIC concludes its investigations into the procurement of SCIPA to implement the EGMS,” he told journalists.

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2.7pc of retail price

But in a quick rejoinder to Mr Kutuny’s statement, SIPCA said the stamp price represents, at most, 2.7 per cent of the retail price of the least expensive products in the categories.

“We wish to clarify that excise stamps prices as set by KRA for soft drinks, juices and cosmetics are only Sh0.60 per stamp while that of bottled water is just Sh0.50 and not Sh1.50 as claimed,” said SIPCA in a statement.

Previously, the taxman targeted large consumers such as supermarkets and hotel chains for enforcement of EGMS.

But the law has since changed and transferred the burden to manufacturers and importers of the goods.

KRA and SICPA originally signed the e-tax contract in December 2012 to produce excise stamps for tobacco products, wines and spirits.

The contract was later renegotiated after a June 2013 legal notice that expanded the scope of goods to cover beer, bottled water and soft drinks.