June 18, 2024

Why we increased VAT on bread; Finance Committee Chairperson Kimani Kuria

3 min read
Why we increased VAT on bread; Finance Committee Chairperson Kimani Kuria

National Assembly Finance Chairperson Kimani Kuria explained why the Treasury proposed to impose VAT on bread in the Finance Bill 2024

National Assembly Finance Chairperson Kimani Kuria explained why the Treasury proposed to impose VAT on bread in the Finance Bill 2024.

Speaking during an interview on Citizen TV on Thursday, April 17, Kuria revealed that the proposal was informed by concerns over the rising cases of diabetes.

The MP detailed that the Treasury was aiming to tackle the lifestyle disease and discourage the use of bread.

In the Finance Bill 2024, the National Treasury proposed to remove bread from the goods that are exempted from VAT and charge it at 16 percent.

This would have seen bread prices shoot up by over Ksh10 shillings. A 400-gram loaf currently retails at Ksh65.

“We had a very long conversation with Treasury. The initial thinking was that there is concern about diabetes,” he stated.

However, he acknowledged that Kenyans were not pleased with the proposal given that many families depended on bread as a basic meal.

The MP also noted that some experts had explained that the move would be counterproductive as many households would seek cheaper options.

“The argument we are receiving from Kenyans is that bread is not a luxury good. It is something that people will have every morning for breakfast. All these are proposals.

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In addition to bread that is baked in the supermarkets, some are baked in informal shops and if we tax bread, people may move from the formal bread and move to those that are baked by the roadside. That could lead to more health concerns.

Owing to the concerns raised by Kenyans, the MP called on Kenyans to give their views on the proposal for amendments to be done.

According to Kimani, bread can either be VAT-exempt, zero-rated or have a 16 percent VAT fee imposed on it.

Notably, in its Medium Term Revenue Strategy, the Treasury had mulled over increasing taxation over sugary products to tame lifestyle diseases.

At the time, the proposal was to increase taxes on the most common sugary products.

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