Kimani Ichung'wa proposes more taxes for Sim cards, alcoholic drinks

Kikuyu MP Kimani Ichung’wa has proposed to further increase the excise tax on items such as sim cards and alcoholic drinks.

Ichung’wa introduced his amendments to the Finance Bill 2022 on Thursday, seeking to increase the tax by between 20.2% and 25.6%.

The MP’s tax proposals are higher than what Treasury CS Ukur Yatani had suggested in the initial bill which would have increased the tax by between 10% to 20%.

If Ichungwah's plan is approved, the tax on a litre of beer will rise by 23.1% to Sh150 from the current Sh121.

File image of Kikuyu MP Kimani Ichung’wa (centre) flanked by other MPs allied to the Tangatanga outfit Pulse Live Kenya

Wines will be subject to tax at the rate of Sh229 per litre, up from the existing rate of Sh208

Spirits with an alcoholic strength of more than 6% will be subject to an excise duty of Sh335, up from Sh278.

The MP seeks to reverse the recommendations by the National Assembly Finance Committee which had rejected the proposals to increase taxes.

“The proposal to increase excise duty on alcohol may encourage uptake of illicit alcohol. The government may not, therefore, achieve the intended purpose of the tax, which is to discourage drinking, and will therefore not realise the expected revenue,” read part of the report.

In addition, Ichung'wah recommended a new Sh50 excise levy on all imported ready-to-use SIM cards.

To protect customers from increased costs on essential goods, MPs approved a proposed amendment to the Finance Bill 2022 that would reduce the Value Added Tax (VAT) on Liquefied Petroleum Gas from 16% to 8%.

Maize, cassava, wheat, and meslin flour are still classified as exempt and zero-rated goods, which means they will not be subject to VAT (at the rate of 16 per cent).