The prices of alcohol, juice and cosmetics to go up as KRA plots 300pc tax stamp hike

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Consumers should brace for a fresh round of price increases on alcohol, juices, cosmetics and cigarettes if a proposal by the National Treasury to raise the price of excise stamps by up to four times is approved by parliament.

KRA has a target of collecting Sh3 trillion this year that was set by President William Ruto in a bid to reduce the country’s debt burden which currently stands at Sh7 trillion.  

“We should be able to collect enough money. Our Growth Domestic Product (GDP) has risen Ksh12 trillion yet KRA only raised about 14 percent of GDP in revenues last year. In the past KRA was able to raise 18 percent of GDP. If we collect the same target today, then we would have raised an extra 4 hundred billion shillings. In that case I expect KRA to collect 3 trillion in the next financial year,” the President stated during an event to mark annual taxpayers month last year.

The tax man posted record-high annual revenue collection of Sh2.031 trillion for the 2021/2022 financial year and is now looking for an extra Sh800 million through several proposed tax raises.

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The Excise Duty (Excisable Goods Management System) (Amendment) Regulations, 2023 proposes to raise the stamp fees for cosmetics from 60 cents per stamp to Sh2.50, while the stamp fee for fruit juices and non-alcoholic beverages such as sodas will go up to Sh2.20 from 60 cents.

Additionally, the cost of a stamp affixed on a beer bottle will double to Sh3 from Sh1.50, while those for spirits, wines and tobacco products are set for a 79 percent rise to Sh5 from the current Sh2.80 per stamp.

These higher taxes will likely be passed down by producers and importers to consumers who are already burdened by the high cost of living. Kenyans are already paying higher prices for beer, juice, wine, water, and chocolates after KRA increased the excise tax for these products two months ago citing inflation.

The adjustments caused the tax on a bottle of water go up from Sh6.6 per litre to Sh7.02, as the tax on juice went up to Sh14.14 for every 12 litres, up from Sh13.3. On the other hand, sugar confectionery taxes rose from Sh40.3 for every 36 kilos to Sh42.9. This is as the tax for every two beer bottles or a litre increased  to Sh142.4 from Sh134 and Sh4.06 for filtered cigarettes.

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