Kenya’s Wallet Pinch: Key Items Affected by 2024 Finance Bill
The Finance Bill 2024 is stirring debate among Kenyans as President Ruto aims to introduce new taxes and raise existing ones to fund the 2024-2025 budget.
Kenyan manufacturers and the broader business community argue that some of the proposed taxes, such as the Eco Levy and revisions to excise duties on manufacturing raw materials, will disproportionately burden consumers in Kenya.
The Association of Kenya Insurers has expressed concerns about the newly proposed Motor Vehicle Circulation tax.
With the introduction of new taxes and increases in existing ones outlined in the Finance Bill 2024, here are the products for which Kenyans will face higher costs.
1. Plastic Household Items
A proposed 10 percent excise duty on plastic products will drive up prices for items like basins and mugs commonly used in Kenyan households. The Kenya Association of Manufacturers (KAM) estimates that the cost of a basin could rise from Ksh.110 to around Ksh.200 due to this proposal and additional levies like the eco levy.
2. Packaging and Wrapping Materials
The bill suggests introducing an eco-levy on certain goods manufactured or imported into Kenya, which are deemed harmful to the environment. This will inevitably result in higher prices for plastic packaging materials, batteries, and hygiene products. KAM suggests that bar soap, for instance, could increase from Ksh 170 to approximately Ksh 270 due to the levy.
3. Airtime and Internet Services
The National Treasury proposes raising excise duty on telephone and internet data services from 15 percent to 20 percent. This will lead to increased costs for accessing call and internet services for Kenyans.
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4. Cooking Oil
A proposed 25 percent excise duty on vegetable oils will raise the price of cooking oil, a staple commodity. When combined with the eco levy on plastic packaging, cooking oil prices could rise by up to 80 percent.
5. Bread and Margarine
Manufacturers project that bread, which uses cooking oil, could increase from Ksh70 to Ksh80. Margarine prices may also jump from Ksh160 to Ksh300 due to the levy on vegetable oils. However, there’s debate over the proposed increment in bread prices as the President has instructed VAT exemption.
6. High Volume Alcoholic Products
The Finance Bill 2024 proposes calculating excise on alcoholic beverages based on pure alcohol content (ABV), which may lead to price increases for products like vodka and whiskey.
7. Motor Vehicle Maintenance and Insurance
The bill introduces a motor circulation tax set at 2.5 percent of the vehicle value, capped at Ksh100,000 maximum and Ksh5000 minimum. This tax, if passed, will increase motor insurance costs significantly, as warned by the Association of Kenya Insurers. Additionally, vehicle maintenance costs are expected to rise due to the Eco Levy Tax on rubber tyres.
8. Smartphones and Microphones
Goods contributing to pollution, such as smartphones and loudspeakers, will face an eco levy. This will result in higher prices for these items, along with others like earphones, monitors, projectors, ATMs, calculating machines, and cash registers.
Kenya’s Wallet Pinch: Key Items Affected by 2024 Finance Bill