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Coca-Cola opposes proposals in Finance Bill 2024 that will hike soda prices

During a public participation session on Thursday, senior Coca-Cola officials challenged several tax proposals, particularly the 10% excise duty on plastics and the Eco-Levy.

The Coca-Cola Wozzaah Zero Sugar drink was announced during President William Ruto's visit to the Coca-Cola headquarters in Atlanta on May 21, 2024.

The company warned that these measures could lead to double taxation and significantly increase operational costs.

Coca-Cola emphasised that such financial burdens could deter direct foreign investments and make their products unaffordable, and destabilise the business environment in Kenya.

The Finance Bill 2024 has introduced various tax reforms that have sparked debate among multinational companies operating in Kenya.

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“Frequent and unanticipated tax policy shifts create a volatile business climate, erode investor trust, and hinder strategic planning. Such unpredictability, exemplified by abrupt tax rate changes or the introduction of new taxes, directly impacts the core structures of businesses.

"This instability not only discourages investment but also affects tax remittances,” said Cliff Machoka, Director of Public Affairs, Communications, and Sustainability at Coca-Cola East and Central Africa.

Coca-Cola also urged the committee to consider dropping the proposed amendment to Section 42 (G) of the Excise Duty Act by deleting the word “imported” on all plastics.

John Mwendwa, the Public Affairs, Communications, and Sustainability Director Coca-Cola Africa, said that with excise duty for plastic products in Uganda, Tanzania, and Rwanda being zero-rated, Kenya was likely to lose business to its neighbours.

“By imposing excise duty on locally produced plastics, this will increase the cost of production and thus increase the cost of goods that require the use of plastic packaging,” Mwendwa stated.

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“Coupled with other proposed levies on plastic packaging, this will result in multiple taxation on the same product, further increasing costs for businesses and consumers," he added.

The eco levy seeks to impose Sh150 per kilogram on all articles of plastic packaging materials.

Coca-Cola further urged lawmakers to consider exempting commercial and agricultural vehicles from the 2.5% car circulation levy. They proposed lowering the rate from 2.5% to 1%.

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Tile & Carpet Centre Limited also sought protection, urging the committee to consider exempting white cement from excise duty or allowing preferential importation of this product through a duty remission scheme for manufacturers.

They justified this by stating that there is no local producer of white cement within EAC, which is a key raw material for tile adhesives, grouting, and other cement-based products.

They further called for the removal of the export and investment promotion levy of 3% customs value covering sanitary fixtures, as there is only one local manufacturer who is still building capacity.

Technology Service Providers of Kenya (TESPOK) urged the committee to drop the proposed amendment to the Excise Duty Tax Act 2015 to increase the excise duty on telephone, internet, and data services to 20% and instead substitute the rate with 10%.

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TESPOK argued that Kenya has the highest tax contribution at 37% of total market revenue compared to the Sub-Saharan average of 26%.

They also proposed the removal of SIM cards and cellular phones from the list of excisable services.

Appearing with TESPOK, Wananchi Group proposed that the committee consider retaining excise duty on internet at 15% or consider lowering the rate to enhance connectivity, penetration of ICT services in remote areas, and promote growth within the industry.

The National Assembly Finance and National Planning Committee chairperson, Kimani Kuria, assured stakeholders that the government is keen to make Kenya a manufacturing country.

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He reassured them that the committee would not adopt measures that would harm the local manufacturing sector, forcing players to relocate to other countries within the region.

Committee members, led by Umul-Kheir Kassim (Mandera Woman Rep), called for regular stakeholder engagement post-approval of the Finance Bill to assess the impact of the law on the economy.

“Do not just engage with us during the consideration of the Finance Bill. Let us engage regularly to assess the impact of the approved law so it can inform how we approach the next Finance Bill,” she urged.

So far, the committee has engaged 105 organized groups, with 71 others set to have their memoranda received.

The stakeholder engagements continue at the Kenyatta International Convention Center (KICC).

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