LSK battles KRA over excise tax stamp cost

By John Muthoni | Feb 28, 2023
LSK president Eric Theuri. LSK in its High Court case argues that KRA has failed to crack the counterfeits market. [Wilberforce Okwiri, Standard]

The Law Society of Kenya has moved to court to challenge the proposed increase of excise duty stamp cost.

The lawyers' lobby, in its case against Kenya Revenue Authority, Parliament, and Attorney General, argues that an upward adjustment of excise duty will further hurt Kenyans who are already barely surviving due to the decline of shilling purchase power, high cost of electricity and fuel among others.

According to LSK, there is no justification for why KRA should increase the price of excise stamps as they are only meant to weed out counterfeits.

"This act will destabilise the Kenyan market and erode government revenue through the imposition of excessive tax administration fees on legitimate manufactures far beyond what is imposed in the neighbouring countries and across the world," LSK lawyers, led by its president Eric Theuri, argue.

LSK in its High Court case argues that KRA has, even with the stamps, failed to crack the counterfeits market.

"What we are challenging is the adjustment of stamps. There is an already existing stamp which the respondent can continue administering when the case is being heard," Justice Hedwig Ong'undi was told.

The lawyers' body insists that the set price is unreasonable and the highest worldwide, including in the East Africa region.

"The implication of this is that manufacturers in Kenya will continue losing their grip on the domestic market through increased competition from EAC partner states and the growth of illicit trade, fuelled by the increasing tax differentials.

"Consequently, competitors who retail products within the African region will have an unfair advantage with respect to the specific market with the effect of creating an inequitable economic environment," LSK says.

Lawyers say the impugned adjusted rates of excise stamps will also widen the excise duty tax rate in the East African community by continuously disadvantaging the manufacturers in Kenya against their counterparts within the region.

On the other hand, KRA, AG, and Parliament have urged the High Court to dismiss the case.

They argue that LSK has jumped the gun as the new excise duty proposal is yet to become law with the AG telling the court the government is seeking public comments.

"The fact that it has been brought prematurely, there is no case. Whatever grievance LSK has, it can be submitted to the National Treasury," the AG asserted, adding that public interest lies in favour of the government as the stamps will ensure that products are effectively traced and consumers pay for the same.

The judge heard that there is a legal notice for the court to act on.

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