KENYA – Barely four months after the Kenya Revenue Authority (KRA) implemented an excise duty inflation adjustment on beer, juice, wine, water, and confectioneries, the taxman has yet again proposed to increase the cost of excise duty stamps for some goods, as part of its measures to increase revenue collection.
KRA, in a public notice, has published a proposal to review The Excise Duty (Excisable Goods Management System) Regulations, 2017, through The Excise Duty (Excisable Goods Management System) (Amendment) Regulations, 2023, which contain the new costs for the duty stamps.
National Treasury Cabinet Secretary Njuguna Ndung’u has proposed an upward adjustment of fees on excise stamps for wines and other alcoholic beverages obtained by fermentation of fruits and compounded spirits of alcoholic strength exceeding 6 percent by a further five percent reflecting an increase to Sh5 from Sh2.80.
For beer, cider, perry, mead, opaque beer, and mixtures of fermented beverages with non-alcoholic beverages, the cost of an excise stamp will increase from Sh1.50 to Sh3 as the government seeks to squeeze more revenues from sin tax to fund its budget.
Traders of other non-alcoholic beverages, not including fruit and vegetable juices, fruit juices (including grape must), and vegetable juices, unfermented and not containing added spirit, will now pay Sh2.20 per excise stamp from Sh0.60.
This time around, bottled water has been spared from the proposed adjustments, possibly because of the segments’ decrease in the revenue outlook.
KRA noted that the revenue from the excise stamp fees shall be retained by the Commissioner for the financing of the system and compliance management activities of the excise sector.
In the October review, duty increased on a liter of beer by Sh8.44 to Sh142.44, wine (Sh14.43 to Sh243.43), spirits like whisky (Sh21.12 to Sh356.42), juices (Sh0.84 to Sh14.14) and bottled water (Sh0.38 to Sh6.41).
“As we prepare the financial year 2023/24 and the Medium Term, emphasis will be on aggressive revenue mobilization including policy measures to bring on board additional revenue,” Ndung’u said last week during the public hearing for the 2023/24 and the medium-term budget preparation event, in Nairobi.
The latest Treasury data shows that total revenues by the end of November 2022 amounted to Sh893.8 billion against a target of Sh912.9 billion, presenting a task to the KRA to close the gap.
The current financial year’s revenue target for KRA is Sh2.14 trillion while the government is keen to double its revenue from Sh2.1 trillion to over Sh4 trillion, according to The Star magazine.
In June last year, prices of these goods also increased to the higher excise tax after Parliament passed the Finance Bill 2022. This saw bars and restaurants increase product prices by between Sh12 and Sh20.
Beer products whose alcohol content exceeds six percent saw excise duty go up to Sh134 per liter from Sh121.85.