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Fuel, spirits and cigarettes: Kenya's season of price increase

New excise duties after the pandemic crisis

28-09-2021 by redazione

Autumn always brings as a gift the ailments not cured in the previous season and temporarily weakened by summer. This is also the case in Kenya where the government's economic squeeze has begun and consequently the festival of price increases.
With inflation galloping and the shilling that has not managed to fall below 110 against the dollar for two years now, the election campaign coming up and the interest on Chinese loans to be honoured, the country's financial situation is not in good shape, even if optimism comes from the recovery of exports and the heartening figures for 2019 that are expected to return in a short time.
Meanwhile, the first negative sign, last week, was the increase in fuel prices which, after petrol hit 132, an increase of 7 shillings per litre, reached all-time highs, causing a one-day public transport strike and demonstrations in different parts of the country, and heavy criticism of the Government.
Kenya is currently the African country with the highest price of super and diesel fuel, and it is the excise duty increases that are weighing particularly heavily on fuel prices. After all, Kenya has the highest taxation regime compared to countries throughout East Africa.
But that's not all, the adjustment of the excise duty rate to inflation of 4.97%, decided by the Kenya Revenue Authority (KRA), the Kenyan tax authorities, will increase another thirty consumer goods in the country, some of which are of primary consumption such as bottled mineral or purified water, beer, cigarettes, fruit juices and energy drinks.
As of 1 October, an extra 6 shillings will be paid for a litre of beer, while alcohol prices will rise to 13 shillings per litre. Alcohol and spirits were already overcharged by between 5 and 20 shillings just over three months ago. Since 2015, the price of beer has risen by 16%, wine by 32% and spirits by as much as 52%.
The price of a packet of cigarettes will increase by 3.20 shillings while bottled water will increase by about 3.5 shillings per litre.
The Kenya Association of Manufacturers (KAM) has criticised the government for continuously introducing policies that increase the cost of production and distribution for local industries.
According to an economic survey earlier this year, the manufacturing sector is among those most affected by the pandemic, with growth plummeting to one per cent in 2020 from 2.6 per cent in 2019.
Then there are the side effects: smuggling of illegal cigarettes and artisanal alcohol production are on the rise. Stop Crime Kenya has also sounded the alarm: the continued increase in excise duties will fuel illicit trade in the country, a trade that costs Kenya more than $150 billion a year in lost taxes and deprives the state of resources needed for basic services, as well as strengthening criminal enterprises and fuelling corruption.

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