Relief as petroleum products exempted from 6.3% inflation adjustment

Kenya Revenue Authority (KRA) Commissioner General Githii Mburu has on Monday announced that only petroleum products will be spared from the 6.3 percent inflation adjustment of excise duty.

Speaking during the launch of the Taxpayers Month, Mburu asserted that KRA has issued a legal notice for publication and that it ought to have done so today or over the weekend, but did not provide an effective date.

“The only category we are going to leave out is petroleum products because of the current high prices,” Mburu said.

The inflation adjustment is expected to see price hikes in various excisable commodities in the country.

The cost of a bottle of water will increase from KSh 6.6 per litre to KSh 7.02, and the price of juice will go up from KSh 13.3 to KSh 14.14 for every 12 liters. Additionally, the tax on sugar confections will increase from KSh 40.3 to KSh 42.9 for every 36 kilos.

KRA will now charge KSh 142.4, up from KSh 134, for every two beer bottles or one liter of your favourite beverage, and KSh 4.06, up from KSh 3.82, for filtered cigarettes.

In addition, the taxman will increase the price of wine to KSh 243.4 per 208 liters from KSh 229 and the price of spirit to KSh 356.4 per 278 liters from KSh 335.

“The specific rates will be adjusted using the average inflation rate for the financial year 2021/2022 of six decimal three per centum (6.3 percent), as determined by the Kenya National Bureau of Statistics,” KRA said.

Last week, Kenya Association of Manufacturers (KAM) unsuccessfully sought to have the inflation adjustment dropped.

The Association argued that the increase in tax will hurt Kenyans who are already grappling high costs of everything.

“The Finance Act 2022 increased excise tax rates by 10% and 20%, effective 1st July 2022. A further increase of 6.3% within three months will result in a massive 16.3% to 26.3% cumulative tax increase in one year. Such an increase will significantly impact on mwananchi, who is already overburdened by the ever-increasing cost of living. The cost of raw materials and intermediary inputs has increased by 15% – 20% due to global commodity price hikes,” KAM said.

The cost of living in Kenya rose to the highest level in 63- months in September to hit 9.2 per cent up from 8.5 per cent in August.

The Kenya National Bureau of Statistics (KNBS) attributed the high cost of living to a sharp increase in the cost of food, fuel and cooking oil over the past 12 months.

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