KENYA – Sugar consumers in Kenya await an excise duty of KES5 per kilogram of imported sugar once the controversial financial bill, which has received overwhelming support from the members of parliament affiliated to the ruling Kenya Kwanza party is passed.

Treasury Cabinet Secretary Njuguna Ndung’u proposed an exercise duty to sugar, explaining that the move would curb over-consumption because the product is linked to various ailments.

“To discourage consumption of sugar, I propose to the National Assembly to introduce excise duty on imported sugar at the rate of Ksh 5.0 per kilogram, excluding the sugar imported or purchased locally by registered pharmaceutical manufacturers for use in the manufacture of pharmaceutical products,” he stated.

Additionally, Prof. Ndung’u argued that imposing an excise duty on sugar will make the products manufactured using sugar uncompetitive because other EAC (East Africa Community) states do not impose excise duty on sugar.

The duty would also have applied to local sugar as per the Finance Bill 2023, had the Budget and Finance Committee of the National Assembly not amended the Bill to specify that it would only apply to imported products.

The proposal is expected to add more pain to local consumers as the country is heavily reliant on sugar imports to meet the demand. Currently, Kenya is facing a shortage of the commodity which has driven prices to highs of Sh210 per kilogram.

On May 24, Agriculture Cabinet Secretary Mithika Linturi announced plans to import 180,000 tonnes of sugar due to the severe shortage across the commodity.

“It is unfortunate because we should be crashing sugar from within the country that should be able to sustain our market,” the CS noted at the time.

Kenya Association of Manufacturers has also urged parliamentarians to reconsider the bill, pointing out that it will lead to a further increase in the price of the commodity that has become essential to most households.

Similarly, the lobby group has termed the planned excise tax of (Sh42.1 per kilo) on locally manufactured confectionery as punitive.

“It will drive several local companies out of business, as it will make them uncompetitive and their products unaffordable. This move will eliminate the competitiveness of the local confectionary industry against imports as the retail prices will increase due to the excise duty cost that will be passed on to the consumers,” KAM reacted to the Finance Bill 2023.

“It will also erode the competitiveness of locally produced confectionery products in regional export markets such as Tanzania and Uganda, where similar proposals to make local confectionary excisable were rejected after lawmakers assessed the #Mufikesalama negative impact on the industry.”

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