Why you may soon pay more for beer,cigarette

The price increase could come into effect as soon as July.


You could soon pay more for beer, cigarettes, bottled water and fruit juices if proposed amendments in the Finance Bill are passed into law.

The Bill, set for debate in Parliament tomorrow, seeks to increase the prices of the commodities after every two years pegged on the average inflation rate in the 12 months preceding the bi-annual review.

The Bill, if passed, could see the price increase come into force as soon as this July.

The inflation-based tax, under the Excise Act, has never been implemented and whereas it increases every year, the amendment, if passed, will see the adjustment frequency changed to two years.

Inflation rate has averaged about 7.9 per cent in the past five years, signaling a significant surge in consumer prices if the government chooses to effect the tax this year.

The proposal is viewed as a reprieve to consumers, distributors and producers of the affected goods such as brewers and cigarette manufacturers.

It is viewed as a way of helping investors make long term investment decisions as opposed to how it has been previously where there has been uncertainty in the market given the annual inflationary adjustments, leading to instability in prices of the affected goods and distorting the overall inflation.

The tax, which is chargeable on a long list of commodities such as beer, fruit juice, bottled water, cigarettes, and cosmetics, will rise in line with the average rate of inflation for the 12 months ending June 30, 2017.

The cost of living rose by an average of 7.6 per cent in the ten months to April.

In his budget speech last month, Mr. Rotich said that the inflation-based adjustment of the excise duty will start in July to help boost revenue collections.


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