Treasury targets alcohol, tobacco in new tax raid
By Gladys chepkemoi - 2023-01-19 17:16:07 - [General]
Alcohol and cigarette manufacturers are staring at another hit by a hike in production costs after the National Treasury proposed to almost double excise stamp fees effective March 2023 as the government races to beat revenue collection targets.
Should the proposal by the Excise Duty (Excisable Goods Management Systems) (Amendment) Regulations, 2023 sail through, the prices of tax stamps on beer, wines and spirits, and tobacco products will be Sh5 each, representing a 79 per cent increase from the previous Sh2.8 rate. Stamps affixed to bottled water will also increase by a similar margin while that for cosmetics have been hiked by over 300 per cent from Sh0.6 to Sh2.5 per stamp collectable by the Kenya Revenue Authority (KRA).
The increase in the excise stamp costs means firms such as British America Tobacco (BAT) and East Africa Breweries Ltd (EABL) will be facing additional tax expenditures, aggregating their production costs which are already saddled by the cost of fuel and other raw materials.
Experts warn that while the increase in excise taxes, also known as the “sin” tax, could be a way of reducing alcohol and tobacco usage, it could dent the economy through thriving illicit trade due to huge price differentiation with the neighbouring countries.
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