Consumers will pay more for alcohol, cigarettes and betting after Parliament Wednesday reviewed upward taxes proposed by the Treasury PHOTO | FILE | NATION MEDIA GROUP Consumers will pay more for alcohol, cigarettes and betting after Parliament Wednesday reviewed upward taxes proposed by the Treasury in changes that saw the lawmakers block the move to scrap a cap on commercial lending rates imposed in 2016.
Parliament’s Finance committee in its review of taxes for the year starting July maintained the rate cap but sought to change its language to plug gaps highlighted by Judges who earlier termed control of loan costs illegal.
In its budget proposals to Parliament in June, the Treasury sought to repeal the rate cap, arguing that it has squeezed private sector credit growth as banks shunned lending to customers deemed risky such as small and medium-sized businesses.
In a raft of new tax measures intended to finance Kenya Sh3.1 trillion Budget, MPs increased excise duty charged on cigarettes by 26.4 percent, wines (26 percent) and spirits (26.5 percent).
The Treasury had in June proposed an average rise of 21 percent increase on the three items.
Beer, wines and spirits prices had increased by 5.17 percent in July after the annual automatic adjustment to factor inflation was effected.
The committee also hit gamblers with a 20 percent excise tax on the amount they bet, up from Treasury’s proposal of 10 percent in a move that will automatically give the government a sizeable share of the billions of shillings that Kenyans have been using in sports betting.
The government previously targeted winnings when taxing betting firms in changes that drew opposition from betting firms, a majority of whom are out of business after the State failed to renew their operations permits from July on unpaid taxes.
Lawmakers were in agreement with the Treasury on the need for punitive betting taxes in response to the negative social effects of gambling on young and vulnerable members of society.
“The committee observed that betting tax and excise duty tax were meant to address different issues hence it was impossible to treat these two taxes as the same. In order to deal with negative externalities related to betting, the tax chargeable is excise duty,” the committee said. Ongoing review On interest rate caps, the committee said it will support the ongoing review of the law that seeks to entrench interest rate controls.Parliament is currently debating a new […]