Kenyans are set to start enjoying cheaper electricity, cooking gas, detergents, sanitisers and processed foods.
This is after the government cut the value-added tax rate to 14% from 16% to ease pain on households facing lower pay in the wake of coronavirus. The move marks for the first in seven years when Kenya has reduced VAT.
“The National Treasury shall call the immediate reduction of VAT rate from 16 percent to 14 percent effective April 1, 2020,” President Uhuru Kenyatta announced yesterday.
It's not just electricity and processed foods that will be cheap in the coming days but newspapers, books, phones, electronics, computer hardware and software too.
Raw foods are usually exempted from the tax.
The value-added tax is key to the government plans to shrink its fiscal deficit while funding essential programmes. The Kenya Revenue Authority (KRA) collected Sh211 billion in the six months to December.
Meanwhile, the Treasury expects government revenue collection to be hit as both imports and domestic consumption slow in the wake of restrictions that followed the coronavirus outbreak.
“We are looking at underperformance as a result of Covid-19, of about 70 billion (shillings) ... in terms of revenue for the remaining three months (of this financial year),” said Cabinet secreatary Treasury Ukur Yatani warned earlier.
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