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Sweet makers hide behind babies to avoid Sh20 tax

By Otiato Guguyu | Published Thu, July 19th 2018 at 14:50, Updated July 19th 2018 at 14:54 GMT +3

NAIROBI, KENYA: Manufacturers lobby has suggested that excise duty as a sin tax on sweets is charging minors before they even start making a shilling.

Finance Cabinet secretary Henry Rotich bundled sweets and taxes under a new sin tax charging Sh20 on every kilogram of chocolate and confectionaries in his Finance Bill.

The lobby, Kenya Association of Manufacturers says that the new excise duty will increase another tax, VAT, by Sh3.2 per kilogram and will reduce demand since consumers in the segment are price sensitive.

“Majority of consumers of these products are aged between 2 to 18 years of age and this amounts to taxing them ex-ante (that is before becoming “real” income earners),”

KAM faulted the reason cited by government stating that if the motive is to reduce consumption of sugar products-then government was ill advised as Sugar is more prevalent in other products compared to confectioneries.

They have also questioned as to why they have been lumped together with chocolate which they claim has no local producer since Cadbury upped and left in 2014 citing high production cost.

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Chocolate is also priced differently with one Kilogram going for Sh1,750 meaning the Sh20 is just 1.1 per cent of the cost while sweets cost Sh150 therefore the tax is a whopping 13 per cent of the total cost.

The local confectionery market has been growing over the years which in 2010 was not exporting sweets but now boasts of 9 firms producing 55,417 metric tonnes out of which 23,084 is exported.

Finance Cabinet secretary Henry Rotich bundled sweets and taxes under a new sin tax charging Sh20 on every kilogram of chocolate and confectionaries in his Finance Bill.

The lobby, Kenya Association of Manufacturers says that the new excise duty will increase another tax, VAT, by Sh3.2 per kilogram and will reduce demand since consumers in the segment are price sensitive.

“Majority of consumers of these products are aged between 2 to 18 years of age and this amounts to taxing them ex-ante (that is before becoming “real” income earners),”

KAM faulted the reason cited by government stating that if the motive is to reduce consumption of sugar products-then government was ill advised as Sugar is more prevalent in other products compared to confectioneries.

They have also questioned as to why they have been lumped together with chocolate which they claim has no local producer since Cadbury upped and left in 2014 citing high production cost.

Chocolate is also priced differently with one Kilogram going for Sh1,750 meaning the Sh20 is just 1.1 per cent of the cost while sweets cost Sh150 therefore the tax is a whopping 13 per cent of the total cost.

The local confectionery market has been growing over the years which in 2010 was not exporting sweets but now boasts of 9 firms producing 55,417 metric tonnes out of which 23,084 is exported.

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