FILE PHOTO | NMG
The Kenya Revenue Authority (KRA) is likely to lose its power to unilaterally impose a new inflation tax on a wide range of goods including fuel, bottled water, juice and beer from July 1.
The adjustment has been in line with the law that demands excise duty to be revised upwards in tandem with the cost of living measure or the average rate of inflation in the 12 months through June.
Inflation adjustment tax was introduced in 2018 and is seen as a means of protecting the government’s spending power from erosion by rising cost of living and avoid seeking MPs’ nod for higher retail prices.
This set the excise duty on beer at Sh6.10 a litre with the tax currently at Sh110.62 a litre or Sh55.31 a bottle, giving Kenya one of the highest rates of tax on alcohol on the continent.
Manufacturers affected by the excise taxes have opposed the annual inflation adjustments, arguing that it leads to price instability and distort the overall inflation.