Kenya Proposes Higher Taxes on Cigarettes, Juices, and Cosmetics

Jan.18.2023
Kenya Proposes Higher Taxes on Cigarettes, Juices, and Cosmetics
Kenya proposes increasing taxes on cigarettes, juice, and cosmetics to increase revenue and reduce debt.

Kenyans will have to dig deeper into their pockets to enjoy a cigarette, quench their thirst with juice, or enhance their appearance with makeup.


This is because the National Ministry of Finance has proposed increasing the excise taxes on cigarettes, juice, and cosmetics in the coming months.


According to proposals released by Kenya Revenue Authority, Finance Minister Njuguna Ndungu has said that stamp duty on tobacco-containing cigarettes, e-cigarettes, e-cigarette oils and other nicotine delivery services will be increased from the current 2.8 shillings (approximately $0.03) to 5 shillings (approximately $0.05).


He said that the stamp duty on fruit and vegetable juices, whether or not they contain added sugar or sweeteners, will be raised from the current 0.6 pence to 2.2 pence.


The excise tax applies to other non-alcoholic beverages, but the excise tax on bottled water will remain at 0.5 pence.


However, Ndungu stated that the consumption tax on cosmetics and beauty products will increase from the current 0.6 shillings to 2.5 shillings.


The Kenyan Revenue Authority has invited the public to provide feedback on proposed tax increases by February 3rd.


However, the proposal to increase the stamp duty on juice and cosmetics is a departure from the traditional practice of levying consumption taxes on goods considered to be "sin taxes.


This is a tax specifically targeting luxury services and commodities deemed harmful to humans, such as alcohol, tobacco, drugs, candy, soft drinks, fast food, coffee, sugar, gambling, and pornography.


The essence of imposing taxes on these goods is to increase their cost and prevent their usage.


The measure to increase the consumption tax appears to be in response to President William Ruto's instructions to the Kenya Revenue Authority to increase its revenue from 2.1 trillion shillings to over 4 trillion.


In November of last year, the president stated that increasing revenue would help the country alleviate its debt burden.


I need help to resolve our debt situation. I have reached an agreement with KRA and as a nation, we must increase our debt from between 2.1 trillion shillings to 4-5 trillion shillings," he said.


In middle-income countries, taxes usually account for 20-25% of their GDP. In Kenya, our proportion is currently at 14%.



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