Why 16% VAT? William Ruto's Govt Proposes Tax On Bread To Curb Spread Of Diabetes

• The Finance Bill 2024 proposes tax changes, including the removal of ordinary bread from zero-rated items
• The National Treasury sought to impose 16% Value Added Tax (VAT) on bread as part of measures to raise revenue for the year 2024/25 budget
• National Assembly Finance Committee chair Kimani Kuria revealed that the justification behind the 16% VAT is the concerns raised over bread and diabetes

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.

Why Treasury proposed 16% VAT on bread

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.

"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.

What are the possible taxes on bread?

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.

What are the other tax changes in the Finance Bill 2024?

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.

What to know about Finance Bill 2024

• President William Ruto defended the new tax measures, saying that the country lags behind in terms of tax ratio to revenue.
• National Assembly Finance Committee chair Kimani Kuria revealed that the motor vehicle tax is targeted at over KSh 58 billion.

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.

Why 16% VAT? William Ruto's Govt Proposes Tax on Bread to Curb Spread

Ruto Pipinyaaaaaaaa! Treasury Proposes 16% VAT on Bread! - News