The cost of basic food products that falls under excisable items is set to go up from October 1 as the taxman effects inflationary adjustments to the rate of excise tax.
Kenya Revenue Authority (KRA) says it will activate the changes using the rate of 4.97 per cent which represents the average inflation rate across the 2020/21 financial year.
The adjustment has been subjected to public participation ahead of its approval by the Cabinet Secretary of the National Treasury Ukur Yatani.
“The Commissioner-General adjusts for inflation the specific rates of duty set out in the schedule hereto in accordance with the formula specified in Part 1 of the First Schedule to the Act with effect from the October 1, 2021,” KRA said in a notice yesterday.
The MPs will within 28 sitting days of getting the taxman’s notice, decide whether to endorse or drop the proposed inflation adjustment.
Among the goods and services set to be hit by the adjustment includes petroleum products, beer, wines, spirits, bottled water, fruit juices, airtime and mobile data.
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In the changes, revelers will pay an extra Kes 5.77 for a litre of their beer while the prices for spirits will surge the highest at roughly Kes 13.20.
Motorists, too, will be hit with the price of a litre of petrol expected to increase by Sh1.09, pushing excise duty to Kes 23.04 on the fuel while diesel and kerosene costs will go up by slightly over 50 cents for every litre.
In July fuel price review oil marketers took a hair cut in their margins when the sector regulator effected hold on prices with margins for petrol coming down to Kes 8.82 from Kes 12.39 in June while margins for diesel and kerosene have shrunk to Kes 5.05 and Kes 6.04 from Kes 8 and Kes 8.93 respectively last month.
In June, crude oil prices increased to levels last seen in 2019 attributable to higher production cuts by the Opec nations.
Last month, the price of foodstuffs, consumer goods and home utilities surged to a 17 month-high on increased taxes and supply chain shortages for edible oils, data from the Kenya National Bureau of Statistics show.
The overall year-on-year inflation rate as measured by the Consumer Price Index (CPI) was 6.44 per cent in July.
This was the highest rate of inflation since February 2020 when it hit 7.1 per cent.