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Bread To Cost Ksh.80 If Excise Duty On Cooking Oil Passes, Manufacturers Warn

Local producers of edible oils have raised concerns over the potential implications of the proposed 25% excise duty on vegetable oils outlined in the 2024 Finance Bill. They caution that such a levy could result in an alarming 80% surge in the price of cooking oil.

In a recent announcement, these manufacturers emphasized that the intended duty, targeting both raw materials and refined cooking oils, might render the commodity unaffordable for a substantial portion of the Kenyan population. Moreover, they foresee a ripple effect extending to staple foods like bread. Should the bill pass into law, the cost of a 400-gram loaf of bread could escalate from Ksh.70 to Ksh.80.

The manufacturers further predict sudden price hikes for other indispensable household items reliant on vegetable oil-derived raw materials, including soaps and margarine. For instance, the price of a long bar soap may surge from the present Ksh.180 to Ksh.270, while a 250g pack of margarine could see an increase from Ksh.160 to Ksh.300.

Advocating for the elimination of the proposed 25% excise duty on vegetable oils, these producers argue that such a tax could severely hamper local edible oil production. They contend that it runs counter to the government’s agenda of fostering domestic value addition within the agribusiness sector.

Molo MP Kimani Kuria, who also chairs the National Assembly Finance Committee, is the driving force behind the 2024 Finance Bill. This bill proposes various new levies, including a motor vehicle circulation tax, VAT on bread, and heightened excise taxes on items such as spirits, cigarettes, M-Pesa transactions, airtime purchases, and bank transfers.

The proposed legislation aims to amend several existing laws, including the Income Tax Act (Cap.470), the Value Added Tax Act (Cap.476), the Excise Duty Act (Cap. 472), the Tax Procedures Act (Cap. 469B), and the Miscellaneous Fees and Levies Act (Cap.469C).