Sweet makers hide behind babies to avoid Sh20 tax

Parks of tropical sweets. Manufacturers want the treasury to abolish excise duty on sweets and confectioneries. [Courtesy]

Manufacturers have urged Treasury to abolish excise duty on sweets and confectioneries since it affects their core market, minors. They argue that the sin tax is like charging minors before they even start making a shilling.

Treasury Cabinet Secretary Henry Rotich last month bundled sweets and chocolate taxes under a new sin tax, charging Sh20 on every kilo of the confectioneries in the Finance Bill 2018.

The Kenya Association of Manufacturers (KAM) says the new excise duty will increase VAT by Sh3.2 per kilo and reduce sweeteners’ demand since consumers in the segment are price sensitive.

"Majority of consumers of these products are aged between two and 18 years, and this amounts to taxing them ex-ante (before becoming “real” income earners)," KAM faulted State’s move to tax sweeteners, arguing that sucrose is more prevalent in other products compared to confectioneries.

Local producer

It also questioned the lumping together of sugar with chocolate which they claim has no local producer since Cadbury left in 2014 citing high production costs.

Chocolate is priced differently with a kilo going for Sh1, 750 meaning the Sh20 is just 1.1 per cent of the cost while sweets cost Sh150.

The local confectionery market has been growing over the years. In 2010, Kenya which wasn’t exporting any sweets now boasts of nine firms producing 55,417 tonnes out of which 23,084 are exported.

They want the State to tax imports rather than local products which would earn the taxman Sh1.1 billion less than Rotich would make from them (Sh1.3 billion) as a protectionist policy.

"Consider imposing excise tax on imported confectioneries at a specific rate of Sh20 per kg and chocolates Sh200 per kg instead of imposing it locally manufactured domestic sales," KAM said.

Sweet makers have faced hurdles after Tanzania and Uganda slapped local confectioneries with a 25 per cent duty on suspicion they used duty-free sugar on their products.