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NEW VAT BILL HIKES THE COST OF LIVING IN KENYA

VAT attack - your weekly shopping bill just went up!

VAT attack – your weekly shopping bill just went up!

The much dreaded VAT Act 2013 took effect yesterday and prices of consumer goods are expected to skyrocket from this week. The new law imposes a 16 percent levy on consumer products, many of which had previously either been zero-rated or exempted from tax.

300 MORE GOODS TAXED

The number of zero –rated and tax exempted goods has been scaled down from over 400 to about 100. Among consumer products that will from hence forth be taxed include processed milk, electricity, cooking oil and gas, mobile phones, fertilizer and newspapers. A cross-check in most shops within some residential estates in Nairobi today morning confirmed that the prices of milk had indeed risen to Sh55 per 500ml.

It was a rather taxing morning for this Kenya Forum correspondent who gave her shopkeeper Sh50 In the morning expecting to buy a packet of milk and get some change, only to be left speechless when the shopkeeper said that the money was not enough to purchase the milk. For a moment I thought I had given the guy 20 shillings but then the last time we had a note of Sh20 was in the Jomo Kenyatta era! The shopkeeper was also quick to warn that from tomorrow the same packet would be trading at Sh60.

UNPROCESSED MILK AND MAIZE AMONG TAX EXEMPTED GOODS

You might have noticed, however, that your usual supermarket chain has introduced a fresh milk processing machine in the store. The cost of the milk here is way cheaper than the processed milk considering that a litre goes for Sh60. It’s probably a move that was well calculated in anticipation of a market shift; it’s quite likely that many consumers will shift to buying unprocessed milk due to its affordability in comparison to processed milk where half a litre will be selling at almost the same price of a litre of the unprocessed milk.

ACT OF BETRAYAL?

According to the Consumer Federation of Kenya (COFEK) Secretary-General Stephen Mutoro, the passing of the VAT Act

COFEK Secretary General Stephen Mutoro (left)

COFEK Secretary General Stephen Mutoro (left)

2013 is a risky experiment with the welfare of Kenyans that may just hurt the public as most consumers will opt for substandard goods which may pose health hazards. “The passing of the bill was a betrayal of consumers of this country by the legislators”, he said.

The cost of living in Kenya is certainly high and hard on wananchi as it is and the new Act doesn’t make things any easier or better, except perhaps for the government’s coffers.

President Kenyatta declared winner.

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