Tax Changes to Increase Prices on Diapers and Sanitary Pads in Kenya
Kenyans may soon face higher prices on diapers and sanitary pads due to changes in tax policies.
The government has proposed removing these items from their current zero-rated status under the Eco Levy, potentially raising their costs.
Key Points on the Proposed Tax Changes
- Tax Status Shift: Diapers and sanitary pads may change from “zero-rated” to “exempt” status. This shift would mean that manufacturers can no longer claim refunds for the Value Added Tax (VAT) they pay on inputs, leading to higher costs for consumers.
- Eco Levy Proposal: The Eco Levy is part of the Miscellaneous Fees and Levies Act (MFLA) and aims to impose fees on manufacturers and importers whose products impact the environment.
Background on the Tax Proposal
- Initial Opposition: In June, former Treasury Cabinet Secretary Njuguna Ndung’u proposed this change, which sparked public concern.
- Public Protests: President William Ruto paused the Finance Bill 2024 after Kenyans protested. The original bill proposed zero-rating only for exported goods and services, not for domestic goods like diapers and sanitary products.
ALSO READ: Gachagua Explains Why Mt. Kenya Residents Didn’t Take to the Streets After His Impeachment
Reason for the Exempt Status Change
- Reducing Government Tax Expenditure: The government aims to cut back on tax expenditure, the revenue it loses from offering tax breaks or concessions to specific goods. The exemption status helps reduce these concessions.
Other Affected Items
Alongside diapers and sanitary pads, other products may also face price increases under the new exempt status, including:
- Agricultural Inputs: Raw materials and inputs used in making agricultural pest control products.
- Fertilizers: Raw materials for fertilizers and pesticides, as well as the products themselves, could become more expensive due to the change.
ALSO READ: Over 200 Parliament Employees Found With Fake Academic Papers
Summary
In summary, the proposed changes under the Eco Levy will likely raise the prices of essential items like diapers and sanitary pads, as well as agricultural supplies.
The government’s goal is to manage tax expenditure, though this decision has met with resistance and public concern over increased living costs.
