As KRA prepares to implement the inflation adjustment on excise tax, @WilliamsRuto's administration should consider a revision if it is to deal with the high cost of living as pledged.
A few reasons why:
Short 🧵
The move by KRA will result in 2 major successive excise tax increases in less than 3 months that negatively impact consumer welfare, increase illicit trade and cost of living since petroleum products are included in the proposed increase.
High costs will impact purchasing power of the citizens in turn leading to consumers resorting to purchasing counterfeits and illicit which risks lives and also deny Government the taxes they target to collect.
The taxes Tanzania and Uganda have remained unchanged in the last 4-5years, yet their revenue collections have been increasing. This is making Kenyan industries uncompetitive while fueling the entry of contraband into Kenya.
Excise tax “inflation adjustment” does not mean “increasing tax rates”. The government should consider decreasing the level of taxes given the negative impact they have had and the high cost of living.
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