Price of basic commodities likely to shoot up in July

The prices of basic commodities such as bread, milk, sugar, maize and wheat flour are likely to go up in July if a bill tabled in Parliament last month is passed and signed into law. The Tax Laws Amendment Bill, 2018 seeks to change the tax status of the items from zero-rated to exempt. Millers have warned that changing the Value Added Tax (VAT) status to exempt will lead to expensive flour, an added cost that will be borne by consumers, whose reactions are a sign of growing frustration given the current economic status.

The government through the move intends to raise 1.75 trillion shillings in the next financial year. Most basic commodities are not taxed to cushion the poor, but the changes that will be proposed in the national budget will end that forcing an already overtaxed populace to dig deeper into their pockets. Kenya Revenue Authority commissioner, Benson Korongo, says the taxation review would help in raising additional revenues but could not immediately tell the amount targeted from the changes. The secretary general of the Consumer Federation of Kenya, Stephen Mutoro, has cautioned that applying VAT on all zero rates and exempt items will mean a steep escalation in the cost of living shrinking consumer spending and possibly open the floodgates to cheaper imports.