Kenya: Millers Call for Abolishment of Tax to Lower Wheat Flour Prices

26 January 2021

Wheat millers want the government to abolish duty on wheat and return it to zero-rated Value Added Tax Millers want wheat in order to cushion consumers against the grain's rising international prices.

The government currently charges a 10 percent duty on imported wheat, with millers arguing that they will reduce the cost of wheat products by the same margin if the duty is removed.

Kenya relies mainly on imports of wheat as the country does not produce enough to meet the annual demand.

Effective this month, wheat products such as bread were moved from zero-rated to exempt VAT status, denying manufactures a tax refund.

"If the import duty on the wheat is waived, this will go a long way in protecting the consumers. It is a major intervention that would work well as we do not have control over the rising cost of the commodity internationally," said the millers.

Price controls

Millers have also opposed any possible price control to tame the price of wheat products, saying that it will not work well in Kenya's economy.

The government indicated last week that it was monitoring the rising cost of commodities as it mulls intervention to tame the effects of the price increase.

Economist Tony Watima sided with the processors saying to save the Kenyans from the current high cost of living, the government would have extended the tax relief measure to the citizens to enable them cope with the rising prices of the commodities.

"A tax relief would enable households to have more disposable income that they can spend in the economy and help its recovery," said Mr Watima.

Expensive bread

The cost of bread, which is also determined by the international prices of wheat, has gone up in the first time in four years.

Nearly all brands have gone up with a 400 grammes going up by Sh5 to sell at Sh55 with 600 grammes going for Sh70 from Sh65 previously.

A tonne of wheat has increased by 30 percent to Sh33,000 from Sh25,300 sparking a rally both on bakers and standard flour.

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