NAIROBI, Kenya, May 17 – The Chairman of the National Assembly Finance Committee, Kuria Kimani, has said that the proposed 16 percent tax on bread was recommended by the National Treasury based on diabetes concerns.
Speaking on Thursday in an interview with Citizen TV, Kimani also said that they have received arguments from Kenyans ‘that bread is actually not good’.
“We had a very long conversation with the national treasury, on this VAT on bread, the initial thinking was that bread has concern about diabetes, but the argument that we are receiving from Kenyans is that bread is not a luxury good, it is something that people have every morning for breakfast every time,” Kimani said.
Kimani expressed concern about how changing consumer behavior would result from a 16 percent VAT on bread.
He did, however, acknowledge that before making any adjustments to the suggested tax on the product, they will take into account the views of the public.
“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,” Kimani said.
“I want to reiterate this, these are proposals and the Committee of Finance and National Planning is asking Kenyans to give their views. We will take everything into consideration when doing our report before taking it to Parliament.”
On May 12, 2024, under the Finance Bill 2024, the National Treasury proposed 16 percent VAT on bread, which will increase the cost of Kenya’s favorite breakfast meal by at least Sh10.
Bread is currently VAT-zero-rated. The inclusion of 16 percent will raise the prices from 60 to 70.
The new proposals also suggested the rise of excise duty on fees for mobile money transfer services such as M-Pesa and money transfer charges in banks and Saccos to rise from 15 to 20 percent.
