In order to raise more money to support President William Ruto's ambitious projects, the National Treasury is recommending the implementation of extra taxes.
The Kenya Kwanza government's planned medium-term debt strategy for the years 2024–2025 and 2026–2027 includes a number of significant tax reform recommendations from the National Treasury.
The synchronization of the nation's VAT with the member nations of the East African Community will be one of the highlights of the proposed tax revisions. Kenya levies a VAT of 16%, compared to most EAC states' 18% rates.
After a brief respite, the National Treasury is seeking to reinstate excise duty on alcoholic beverages and tobacco products.
Under the Finance Act of 1923, the government did not impose additional taxes on the goods.
The excise rate for filtered, non-filtered, and other tobacco products will be uniform, but the excise tax on alcohol will be based on the amount of alcohol in it.
Kenyans have until October 6, 2023, to provide feedback on the Treasury's suggestions.
Alcoholic beverages are currently taxed based on a number of factors, including consumer behaviour, product value, consumption volume, and alcohol content.
''In order to streamline the taxation of alcoholic products, over the strategy period, the government will review the basis of taxation to the alcoholic content of the product taking into consideration the harmonisation with EAC region,'' the proposals read in part.
In the draught strategy paper, the National Treasury states that in order to reduce the health concerns associated with alcohol intake, the government will raise the exercise duty on spirits and other items with a greater alcohol content.
''This will be informed by quantitative analysis to determine the optimal tax rate that will be applicable to each alcoholic product,'' reads the draft medium-term debt strategy.
The National Treasury suggests harmonising the exercise duty rate across filtered cigarettes, non-filtered cigarettes, and other tobacco products when it comes to cigarettes and other tobacco items.
According to the National Treasury, it would promote justice and consider global best practises.
''Given the negative health externalities of these products, the rates will be based on the extent of the externalities of these products as well as recommendations of the ongoing EAC partners states study,'' the treasury says.
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