Ice cream, juice and bottled water join ‘sin tax’ league to fund Sh3.3tr budget

Friends share a moment as they enjoy their ice cream. [File, Standard]

Whether you will choose to sit under a tree and sip that fruit juice, eat ice cream or just drink water as you reflect on the rising cost of living, the government will still come for more of its taxes.

Details contained in the Finance Bill 2022 show that it will also get worse for the crafty ones who are betting to get rich quick.

And it is not going to be any better for those who may choose to apply cosmetics and wear jewelry to hide from the worsening state of the economy at the household level.

Treasury Cabinet Secretary Ukur Yatani is proposing increased taxes on fruit juice, bottled water, ice cream, chocolates, cosmetics and beauty products, beer, wine and cigarettes to finance the Sh3.31 trillion Budget unveiled last Thursday.

While Mr Yatani may have carefully selected what to include in his Budget Speech to appear as though the government is in touch with the realities facing Kenyans, the Finance Bill says otherwise.

The CS wants excise duty on fruit and vegetable juices to rise from the current Sh12.17 a litre to Sh13.30, setting the stage for prices of this commodities to rise by at least 9.3 per cent starting July.

Bottled drinking water will see excise duty per litre rise from Sh6.03 to Sh6.60 while ice cream and other edible ice - whether or not containing cocoa - will attract 15 per cent tax.

Imported sugar confectionary will see a Sh3.63 rise in tax per kilogramme to Sh40.37 while tax on white chocolate will increase to Sh242.29 per kilogramme from Sh209.88.

Jewelry, cosmetics and beauty products will also from July attract excise duty of 15 per cent, a jump from the current 10 per cent, also leading to a rise in consumer prices.

Beer and cigarette lovers and gamblers have also not been spared and will be heavily relied upon to raise Sh300.96 billion that is projected from excise duty alone.

Treasury wants tax on beer cider, perry, mead, opaque beer and mixtures of fermented beverages with non-alcoholic beverages and spirituous beverages of alcoholic strength not exceeding six per cent to be taxed at Sh134 per litre, up from the current Sh121.85.

The Sh12.15 rise in excise duty per litre sets the stage for a rise in the price of beer by more than this margin once inflation adjustment by Kenya Revenue Authority (KRA) is effected during the year.

The proposed hikes in prices could get worse on inflationary adjustment given that Mr Yatani, though he handed KRA the power to exempt some products from this annual ritual, wants this to be effected next year.

This means that KRA will this year signal manufacturers and importers of excisable goods to adjust prices upwards in line with inflation, without sparing any excisable goods falling under the specific rate category in the Excise Duty Act, 2015.

Wines, including fortified wines and other alcoholic beverages obtained by fermentation of fruits, will also get a tax hike from Sh208.20 to Sh229 per litre.

Spirits of un-denatured ethyl alcohol and any other spirituous beverages with alcoholi strength above six per cent will start attracting tax per litre of Sh335.30 from the current Sh278.70.

Mr Yatani proposes to raise excise duty on betting, gaming, price competition and lottery from 7.5 per cent to 20 per cent.

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