Consumers Face More Pain as KRA Adjusts Excise Rates

Fuel, alcohol and soft drinks are set for another round of price increase as Kenya Revenue Authority (KRA) prepares to implement inflationary adjustments on various excisable goods and services beginning October 1.

KRA is seeking to increase specific rates of excise duty by 6.3 percent which represents the average inflation rate recorded in the last 2021/2022 financial year. This is to cushion the government’s revenues from being eroded by imported inflation.

This will see the excise duty rate of Super Petrol soar to Sh22,878.60 from the current rate of Sh21,953.02 per 1,000 litres of the product. 

The new rate for Diesel oil is Sh4,339.95 per 1000 litres, up from the previous Sh 4,082.74. Jet fuel will now be charged at Sh23,336.06 per 100 litre.

Other products set for the excise duty adjustments include cigarettes and nicotine products, SIM cards, motorcycles, fruit juices, bottled water, and sweets.

“The Commissioner-General will adjust for inflation the specific rates of duty set out in the Schedule hereto in accordance with the formula specified in Part 1 of the First Schedule to the Act with effect from October 1, 2022,” KRA said in the latest draft legal notice about the inflation adjustment.

In adjusting prices based on the inflation rate for the financial year 2021/2022, for instance, fruits juices that are unfermented and not containing spirits will see excise duty rise from Sh13.3 to Sh14.4.

Bottled water or packaged water and other non-alcoholic beverages not including juices will attract Sh6.41 in excise duty up from Sh6.03.

Beer, cider, Berry and other fermented drinks will see their excise duty fees rise from Sh134 to Sh142.4.

Cigars, imported white chocolate, imported motorcycles, nicotine and tobacco will also attract higher VAT charges. KRA has recently come under sharp criticism for using some prohibited products to increase its tax revenues to a level whereby it is no longer profitable for the businesses to operate.

Kenyans have had no respite in the cost of basic household commodities as the rate of inflation rose further to 8.5 percent in August from 8.3 percent in July.

Data from Kenya National Bureau of Statistics (KNBS) has attributed higher inflation in the month to higher food prices as the food and non-alcoholic beverages index shot up by 15.3 percent across August from the same time last year.

Transport and housing costs meanwhile soared by 7.6 and 5.6 percent respectively in the period with the two expenditure items alongside food contributing to an estimated 57 percent of household monthly budgets.

The excise tax adjustment is in line with the 2015 finance law that gives the tax agency powers to revise duty upwards in line with official inflation records.