Kenya: Proposed 25pc Excise Duty to Harshly Affect Kenyans, Chase Investors, Stakeholders Say

Nairobi — Kenyans are set to brace for harsh economic times following proposals in the finance bill 2024/2025 to increase taxes in the Edible Oil Subsector which will propel an increase in the prices of the commodity.

Edible Oil Manufacturers Chairman Hayel Saeed told Members of Parliament that the proposed taxes will increase the cost of living for Kenyans by increasing prices for basic commodities which include cooking oil, soap, bread and baked commodities.

"With the increase of daily consumables such as bread and chapatis, a family of four people will struggle to have a full meal a day. Some families will be forced to eat one meal every two days," Saeed told the National Assembly Trade Committee.

To avert the situation, the Edible Oil Manufacturers are pushing MPs to repeal the proposed 25 percent excise duties on Edible Oils and Margarines arguing that consumers are already constrained by increase taxes such as housing levy.

The proposed excise duty will raise the prices of cooking oil from Sh 202 per litre to Sh 337 per litre while cooking fat will increase from Sh 107 to Sh 162 which will negatively impact low- and middle-income households.

Bidco Manufacturers Limited Chairperson Vimal Shah argued that 25 percent excise duty whose intention is to curtail importation of palm oil in a bid to promote local production of sunflower oil will adversely affect local manufacturers.

The proposed excise duty is set to apply to both raw materials and refined cooking oils, threatening to significantly increase the price of cooking oil, a staple commodity in every household.

"The bad news about this will apply on our local grown sunflower oil so even us will stop focusing on buying local and focus on exporting the sunflower oil. Why are we destroying our local manufacturing?" he posed.

Shah insisted that the proposed excise duty ought to be struck out saying local manufacturers will crush if the proposals is passed by MPs.

"We can't be talking about improving value addition locally by promoting agriculture and manufacturing yet in this one stroke we are destroying that," he stated.

They have opposed the implementation of the 2 percent levy on the Nut and Oil Crops Directive saying it will have a net saving of Sh 50 on the 20 litres oil jerrican.

"Remove the 2 percent levy on the on the Nut and Oil Crops Directive on all crude oils to promote local processing. We are now disadvantaged and less effiecent on all product that use edible oils as input," Saeed said.

The Edible Oil Manufacturers lamented that the country has become unfavorable for investment compared with neighboring countries like Egypt, Uganda and Tanzania.

Kapa Oil Chief Executive Officer (CEO) Nitin Shah lamented that following the erratic increase of taxes every financial year it has made the market unfavorable for investors.

"Investors look for profits after investing from four to five years. If you keep changing your policy every year then no investors will come here to invest. If you want investors the policies must be constituent," Shah noted.

The stakeholders opposed the introduction of eco-levy at Sh 150 per Kilogram saying its counter effective saying no mechanism have been laid out to signify the efforts of environment conservation through recycling.

Rajan Malde expressed the levy will be passed to the consumers since the alternatives in packaging oil which include glass are expensive and not sustainable.

"We are not against environmental conservation infact we are part of a wider scheme under the Ministry of Environment so that they can recycle plastic waste but these will not support the industry," Malde stated.

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