As the May 28th deadline for public participation for the Finance Bill 2024 nears, more industry players have opposed proposed tax measures, arguing that it will increase the cost of goods and services.
- •The bill proposes a 25% excise duty on vegetable oils, which the Edible Oil Manufacturers Association of Kenya terms a “potential humanitarian crisis that Kenya cannot afford.”
- •The Associated Battery Manufacturers (ABM), a prominent battery manufacturing company, said it opposes the ECO tax which it has called “completely unsustainable.”
- •Others who have opposed tax measures in the bill include the Kenya Bankers Association, the Association of Kenya Insurers, and digital lenders.
“If implemented, this excise duty will trigger an unprecedented surge in the price of cooking oil, a staple in Kenyan households,” edible oil manufacturers’ said in a statement on May 19th, “The cost of this essential commodity is projected to skyrocket by 80%, rendering it unaffordable for millions of Kenya.”
Among the association’s arguments is that price increases for cooking oil will also have cascading effects on other every day products. “The excise duty will cause a cascading effect on these items, inflating the price of a standard loaf of bread (400g) from Kshs 70 to Kshs 80. The price of a long bar soap could escalate from Kshs 180 to Kshs 270, and margarine (250g) from Kshs 160 to a staggering Kshs 300,” the association said.
Meanwhile, ABM is lobbying against the proposed ECO tax on batteries and dry cells, which would be charged at KShs. 750 per kilo. “A small lead acid battery for a motor vehicle is 12kg, with a retail price of Ksh 8, 500.The Eco tax for this small battery will translate to an additional Ksh 9, 000 plus VAT. Therefore, a small car battery will retail at Ksh 17, 500,” ABM said in a statement signed by its CEO, Guy Jack.
In addition to this increase due to the ECO tax, car owners will also have to pay more on insurance premiums if the Motor Vehicle Tax in the Finance Bill 2024 is implemented. “This imposition will notably increase the cost of motor insurance. Currently, the average comprehensive insurance premium rate stands at 5%, and with the additional 2.5%, the total premium rate surges to 7.5%,” Tom Gichuhi, the Executive Director of the Association of Kenya Insurers (AKI) said in a statement on May 17th.
According to the industry lobby group, this increase in insurance premium will push more people to Third Party insurance, which is cheaper because it only covers for third-party liabilities. Such a shift would increase maintenance expenses for vehicle owners, and “lower insurers’ income which will translate to lower corporate tax contributions.”