The prices of 14 categories of excisable goods, including cosmetics, fruit juices, and alcohol, are set to go up after the National Treasury gazetted new excise stamp fees for the commodities as the government chases more revenues.
Treasury Cabinet Secretary Prof Njuguna Ndung’u last week gazetted the Excise Duty (Excisable Goods Management System) (Amendment) Regulations, 2023 that set new fees charged on those products.
The fee for cigars, tobacco substitutes, electronic cigarettes, and other tobacco products has been set at Sh5 per stamp as well as that of liquid nicotine, products containing nicotine, wines, and alcoholic beverages made from fermented fruits.
Treasury has also set the fee for compounded alcohol spirits with a strength of more than six per cent at Sh3 per stamp down from the Sh5 it had proposed in January.
Beer will be charged Sh3, bottled water Sh0.5, fruit juices , cosmetics and beauty product Sh2.2.
This is also a significant increase from the Sh0.6 per stamp that cosmetics and beauty products have been attracting.
The increases come at a time the government is seeking to raise revenue from excisable goods despite opposition from industry players, who argue that higher charges will reduce consumption and fuel illicit trade especially in alcohol.
The government is also seeking a piece of the rapidly growing cosmetics and beauty industry, which has grown by over Sh10 billion over the past 10 years.
Official data shows that imports of essential oils and perfumes rose from Sh21.9 billion to Sh26.3 billion between 2017 and 2021. In the Finance Act, 2022, Treasury increased excise duty on beauty and cosmetic products by 15 per cent, fruit, and vegetable juices 10 per cent, wines and beer 10 per cent and spirits 20 per cent.
And while traditionally excise taxes were meant to be applied on products harmful to human health such as alcohol and cigarettes, with the expected impact of deterring consumption, the Kenya Revenue Authority’s (KRA) has evolved in recent years to include more product categories.
Excise duty is the third largest tax collected by KRA and is poised to play a major role in achieving President William Ruto’s plan to raise revenue collection and cut the budget deficitKRA targets to collect Sh297.2 billion from excise duty by June and to increase this to Sh521.5 billion in 2027.
Kenya Association of Manufacturers and Alcoholic Beverages Association of Kenya had challenged the proposed taxes, saying, they will erode competitiveness and lead to layoffs.
KRA is also betting on digital transactions to boost its numbers. From customs management to value-added tax administration and a planned real-time tracking of sales, a shift by the taxman to digital tax systems is deepening amid pressure to seal loopholes and broaden the tax base to enable it hit its Sh4.8 trillion target by June 2027.
