Tax exemptions to reduce cost of living at household level

June 8, 2016
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Speaking while giving the budget highlights on Wednesday, Rotich also announced the exemption for VAT on cooking gas/CFM
Speaking while giving the budget highlights on Wednesday, Rotich also announced the exemption for VAT on cooking gas/CFM

, NAIROBI, Kenya, Jun 8 – The government has announced a raft of measures aimed at reducing the cost of living at the household level.

They will include the reduction of import duty for energy efficient stoves from 25 percent to 10 percent.

“The duty reduction will also align the energy efficient stoves with similar stoves and cookers that use gas, electricity and other fuels that attract import duty at 10 percent,” Treasury CS Henry Rotich said.

Speaking while giving the budget highlights on Wednesday, Rotich also announced the exemption for VAT on cooking gas.

“The use of wood and charcoal by many Kenyans exposes them to premature deaths as well as denying them access to clean, safe and efficient household energy. I propose to amend the VAT Act in order to exempt liquefied petroleum gas from payment of VAT,” he said.

However, Rotich has re-introduced excise duty on kerosene which will be at Sh7,205 per 1000 litres to curb fuel adulteration, which he says is on the rise.

The removal of excise duty on kerosene in 2011 was intended to cushion low income earners against high prices of this petroleum product. However, the removal of the tax has since resulted in increased adulteration of fuel in the country.

The government has removed all levies to tea and sugar farmers which are usually taxed by their governing institutions adding that the later will now be funded by the government.

Dairy farmers also have a reason to smile after the removal of VAT on raw materials for animal feed which he says has continued to keep the feeds at high costs.

“In order to make animal feeds affordable to farmers and attract more manufacturers to invest in the sector, I propose to exempt raw materials used in the manufacture of animal feeds from payment of VAT,” Rotich said.

Meanwhile, to boost domestic tourism, the government has cut VAT of national park entry fees as well as exempt commissions earned by tour operators from VAT.

Air passenger service charges for external travel rose from $40 to $50 and for internal travel from Sh500 to Sh600.

The revenue realised from the increase will be used exclusively for the promotion of tourism. In this regard, the National Treasury and the Ministry of Tourism will develop a Special Tourism Promotion Fund for this purpose.

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