Kenya Revenue Authority (KRA) is planning to effect a 5.17 percent annual inflation tax adjustment on excise duty charged on the products and with it trigger inflation of the commodities.
Coming on the backdrop of the failure of the much-awaited long rains season in Kenya which has since resulted in the cost of basic food items rising, the new taxation is not music to Kenyan households’ ears.
"I believe the notice is now with the Government Printer. The adjustment rate is 5.17 percent," said KRA deputy commissioner for corporate policy Maurice Oray yesterday.
Implementation of the inflation tax adjustment, which was first implemented last year after being held in suspension for three years, is set to start any time with the KRA having already sent a gazette notice to the Government Printer for publication.
The law stipulates that the KRA should make the adjustment at the beginning of the financial year, which in this case was on Monday.
In a notice dated June 13, 2019, the KRA told manufacturers and importers of excisable goods that the adjustment would be effective from July 1.
Going by the maximum 5.17 percent adjustment for this year, excise on super petrol will go up from Sh19,895 per 1,000 litres to Sh20,923.57, translating to a Sh1.02 per litre increase at the pump.
The excise on diesel and kerosene will go up from Sh10,305 per 1,000 litres to Sh10,837.77, translating to a Sh0.53 increase per litre.
Treasury Secretary Henry Rotich is targeting a Sh37 billion increase from new taxes out of the overall tax projection of Sh1.8 trillion that KRA is expected to collect this financial year.