Drop tax on basic items, urges Icpak

CS Henry Rotich

NAIROBI, KENYA: The Institute of Certified Public Accountants of Kenya wants National Treasury to concentrate more on widening the tax base and drop the proposed changes that will lead to increased prices on essential goods.

Chairman Julius Mwatu said shifting commodities such as LPG, bread, sugar, maize flour, bottled water and processed fish from zero-rated to value added tax-exempt status will hurt low-income earners that the Government’s budget purports to protect.

Addressing the press after the opening of a budget review seminar, Mr Mwatu said the move is bound to make such basic commodities more expensive and defeat President Uhuru Kenyatta’s goal of promoting food security and universal healthcare.

“These are basic consumables for the citizens, some of whom live below a dollar a day. Any trigger that increases the cost of these commodities adds to the high cost of living experienced already,” he said.

Moving goods from zero-rated to tax exempt status implies that manufacturers cannot claim input VAT but instead pass the cost to consumers.

This will mean that Government will not have to deal with the problem of VAT refunds, which stands at about Sh20 billion.

Instead, Icpak wants Government to turn to other alternatives to help fund the budget while cushioning the low-income households against the brunt of high prices.