KENYA – Kenya’s soft drinks manufacturers, led by beverage giant Coca-Cola, are urging parliament to reject a proposed 10 percent tax on locally manufactured plastics.

The manufacturers are warning that the move could lead to increased production costs, higher prices for packaged products, and significant job losses. 

The Finance Bill 2024, currently under parliamentary review, seeks to amend the Excise Duty Act by removing the word “imported” from Clause 42(G).  

The current law imposes a 10 percent excise duty only on imported plastic articles classified under tariff headings 3923.30.00 and 3923.90.90. If the bill passes, the tax will apply to all plastics, including those produced locally. 

John Mwendwa, Coca-Cola’s Director for Public Affairs, Communications & Sustainability, emphasized that the original intent of the excise duty on imported plastics was to protect the local industry.  

By imposing excise duty on locally produced plastics, this will increase the cost of production and thus increase the cost of goods that require the use of plastic packaging,” Mwendwa stated.  

He further warned that the additional tax, combined with other proposed levies on plastic packaging, would result in multiple taxation, raising the cost of doing business and ultimately impacting consumers. 

The National Assembly’s committee chair, Kuria Kimani, agreed with Coca-Cola’s stance, noting that the removal of the word “imported” would effectively mean a 10 percent levy on all plastics, significantly impacting local manufacturers. 

Kimani Rugendo, Chairperson of the Packaging Producer Responsibility Organisation (PAKPRO), said: “Materials used for packing should be exempted from tax. We are levying manufacturers up to Ksh17 per kilo. Imposing an eco-levy at Ksh150 per kilo will amount to double taxation. This means the cost of goods will go up and costs passed to consumers.”

The opposition to the Finance Bill extends beyond the soft drinks sector. The Alcoholic Beverages Association of Kenya (ABAK) has also raised alarms over the proposed changes.  

ABAK warns that the bill’s provisions, including increased taxes, could drive manufacturers out of the country and push consumers towards illicit brews. 

One contentious proposal in the bill is the deletion of Section 14 of the Excise Duty Act, which currently allows local manufacturers to claim tax paid on inputs.  

Eric Githua, chairman of ABAK, argued that removing tax relief on inputs would increase the cost of locally produced spirits, making them less competitive.  

“This could turn Kenya into a net importer of excisable products, making the country uncompetitive within the East African Community and encouraging cross-border illicit trade,” Githua cautioned. 

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