Gov't justifies that 16% VAT on bread is aimed at tackling diabetes

• Government has proposed a 16% VAT on bread as part of the Finance Bill 2024
• Justification for the tax proposal is to tackle rising diabetes cases
• Many Kenyans criticize the proposal, questioning its justification and potential impact on daily life

The government has proposed a 16% VAT on bread as part of the Finance Bill 2024, claiming it as a measure to tackle rising diabetes cases.

However, many Kenyans have criticised this proposal, questioning its justification and potential impact on daily life.

Kuria Kimani, Molo MP and Chair of the National Assembly Committee on Finance and Planning, explained the rationale behind the tax proposal in an interview with Sam Gituku.

Kimani stated, "The initial thinking was possibly concern about diabetes and all that. However, the argument we are receiving from Kenyans is that bread is not a luxury good. It is something that people have every morning for breakfast and it is consumed across the country."

The National Treasury suggested the tax as a health measure, but this has sparked widespread scepticism.

"That is the argument I was given by the National Treasury," Kimani said, but he clarified that no specific study linking bread to diabetes was provided.

Public Participation

Kimani emphasised the importance of public participation in the proposals contained in the Finance Bill 2024.

"We are asking Kenyans for their views on this, and as a committee, we will weigh what the National Treasury is saying against what Kenyans are saying to make an informed decision," he stated.

The concern is that taxing bread sold in supermarkets could drive people to purchase bread from small bakeries or roadside vendors, potentially raising more health issues.

Kimani noted, "If you tax the bread sold in supermarkets, people might shift to bread sold by small bakeries or roadside vendors, which could raise even more health concerns."

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Three Options on the Table

Currently, bread is zero-rated, meaning it does not attract VAT. Kimani outlined three possible outcomes after public consultation:

1. Bread continues to attract 16% VAT as proposed.
2. Bread becomes tax-exempt.
3. Bread is returned to zero-rating.

Kimani assured that all public feedback will be considered when drafting the committee's report.

"After listening to the public, these proposals will be considered, and the National Assembly will then make a decision about it," he said.

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Many Kenyans have expressed their displeasure with the proposed tax, seeing it as a burden on a staple food item.

Senior Counsel Ahmednasir Abdullahi has taken to social media to mock the National Treasury's proposal to impose a 16% VAT on bread, citing health concerns such as diabetes.

He suggested that those who came up with the proposal deserved a Nobel Award.

"So the National Treasury in Kenya will be nominated for next year's Nobel Prize for Medicine for the breakthrough discovery they made...that consumption of bread by very poor Kenyans living in slums leads to widespread cases of diabetes.

Thus VAT tax of 16% is necessary to stop them eating bread and getting diabetes....congratulations to Prof Ndung'u (Treasury Cabinet Secretary) and his team," the lawyer said.

The tweet sarcastically praises the Treasury's rationale, suggesting that the proposed tax is an unrealistic solution to a serious health issue.

Many argue that the tax on bread will disproportionately affect low-income households, making a staple food item less affordable.