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TUKO.co.ke journalist Wycliffe Musalia brings over five years of experience in financial, business, and technology reporting, offering deep insights into Kenyan and global economic trends.
Kenyans will pay more for bread if proposals in the Finance Bill 2024 are approved.
National Assembly Finance Committee chair Kimani Kuria explained that the 16% VAT being introduced on the common breakfast resulted from health concerns raised by the National Treasury.
Speaking to a local TV on Thursday, May 16, Kuria said he had a lengthy discussion with the Treasury to understand their push to withdraw bread from zero-rated items.
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"The National Treasury raised concerns about bread and diabetes. But the argument that we are receiving from Kenyans is that bread is not a luxury good, bread is something that people have every morning for breakfast and taken by across the people," said Kuria.
The Molo MP noted that taxing the bread in the supermarket alone could cause Kenyans to resort to informal baked bread, which poses health concerns.
Kuria revealed that the Bill offers three proposals on taxing bread, urging Kenyans to submit their views during public participation, which will determine whether it will be taxed or not.
"There are three options on taxing bread: it can continue to attract 16% as proposed in the Bill, become tax exempt, or be zero-rated," he said.
The Bill proposed the deletion of bread from items under the zero-rated category and introduce the 16% VAT.
The proposal could see Kenyans pay KSh 10 more for a 400g loaf of bread, which currently retails for KSh 65.
The government also seeks to raise the excise duty rate on fees for money transfer services provided by banks, money transfer agencies, and other financial service providers.
According to the suggestion, the rate could be increased from 15% to 20%.
The cost of airtime and data could also rise as the government seeks to raise an additional KSh 323 billion to finance the 2024/2025 financial year budget.
Proofreading by Nyambura Guthua, journalist and copy editor at TUKO.co.ke
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Kimani Kuria explained that the VAT proposals on bread are justified on health concerns.
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