News dalla rete ITA

16 Giugno 2020

Kenya

NEW TAX TO RAISE BEER, FUEL, MOTORBIKE PRICES

The prices of a wide range of goods including fuel, bottled water, juice and beer will increase from July 1following imposition of new taxes on the products, which will be a blow to consumers already hurt byjob cuts and unpaid leave in the wake of the Covid-19 pandemic.The Kenya Revenue Authority (KRA) will increased excise duty chargeable on at least 31 goods by about5.5 percent, setting the stage for higher retail prices from next month.The adjustment is in line with the law that demands excise duty be revised upwards in tandem with thecost of living measure or the average rate of inflation in the 12 months through June.The tax increase will hit consumers hard as households and traders reel from the impact of theCoronavirus disease, which has reduced shoppers’ purchasing power due to job cuts and movementrestrictions, forcing businesses to cut down their activities.Super petrol is expected to increase by Sh1.16 at the pump as dealers’ inflation adjusted excise dutyrises to Sh22.07 a litre from the current Sh20.91. Kerosene and diesel prices are set to increase bySh0.60 a litre.Fuel prices have a big effect on inflation because Kenya’s economy depends heavily on diesel and petrolfor transport, power generation and agriculture, while kerosene is used by many households for cookingand lighting.The average inflation for the 11 months to May stood at 5.51 percent. This will see the excise duty onbeer increase Sh6.10 a litre with the tax currently at Sh110.62 a litre or Sh55.31 a bottle, giving Kenyaone of the highest tax rates on alcohol in Africa.The excise on spirits is set to go up by about Sh13.40 from Sh253 per litre, while wine will attract anadditional Sh10.41 tax from the current Sh189 per litre.Firms like East African Breweries Limited (EABL) have been raising beer prices by Sh10 per bottle inresponse to the inflation adjusted tax. The listed brewer has issued a profit warning for the year endedJune on reduced sales following the closure of bars to limit the spread of Covid-19, and had previouslywarned of tax-induced drop in beer demand.Other items that are set to attract higher taxation include cigarettes, cigars, fruit juices and motorcycles.Economic growth is projected to drop to 2.5 percent this year, from a pre-pandemic forecast of 5.4percent.The projected revenue from the KRA is expected at Sh1.621 trillion, leaving another Sh1.6 trillion to beraised through borrowing and internal State revenues like fees and fines.The Treasury has set a budget deficit of 7.5 percent of GDP, saying the crisis had upset the government’splan to reduce borrowing.Kenya had pledged to cut its deficit to 4.9 percent of annual economic output, but a locust invasion, thepandemic and floods forced it to ditch the plan. (ICE ADDIS ABEBA)


Fonte notizia: Business Daily