The government is seeking to impose a 16% VAT on maize flour, wheat flour and cassava flour in the Finance Bill, 2022, which is expected to take effect on January 1 2023.
Under the bill, potatoes and ice cream will be subject to an excise tax of 15% while the tax levied on bottled water, soda, beer and spirits will be revised by 10%.
According to Treasury Cabinet Secretary Ukur Yatani, this is in a bid to squeeze Ksh.50.4 billion shillings more to sustain the Ksh.3.3 trillion budget for the 2022/2023 financial year which was released on Thursday.
Speaking while presenting the budget statement before Parliament, Treasury CS Ukur Yatani said the higher excise is separate from the annual adjustment for inflation and is among new tax measures meant to help the government generate additional revenue.
On the other hand, the price of beauty products is also set to increase with supplies like jewellery, which is currently subjected to a 10% excise levy, bound to increase to 15%.
Additionally, inputs for the construction of specialized hospitals, which were previously exempt from VAT will also be imposed with a 16% VAT, while the tax on digital services tax will be revised from 1.5% to 3.0%.
The bill is set to be considered by Parliament’s Finance and Planning Committee, which will thereafter table its recommendations in a report to the August House.
