Why Diapers, Sanitary Pads, and Fertilizers May Soon Cost More
Kenyans may soon experience a price hike on diapers, sanitary towels, tampons, and fertilizers if the proposed Tax Laws (Amendment) Bill, 2024, is enacted. This legislation, presented by Treasury Cabinet Secretary John Mbadi, seeks to change the tax classification of these essential goods from zero-rated to exempt status.
Explaining the motive behind the reclassification, Mbadi argues that it will help to stabilize the economy and bridge the fiscal deficit through increased revenue. “The adjustments are aimed at reducing revenue losses from tax incentives given to particular sectors,” he stated.
The Tax Laws (Amendment) Bill is one of three bills intended to bolster revenue; the others include the Tax Procedures (Amendment) Bill, 2024, and the Public Finance Management (Amendment) Bill, 2024.
Under the current zero-rated classification, businesses selling these goods do not charge Value Added Tax (VAT) and are eligible to claim back any VAT paid on related production costs.
However, if these goods are reclassified as exempt, no VAT will be charged on the sales, but businesses will no longer be able to reclaim input tax credits. Consequently, these additional costs may be transferred to the consumer, making these goods more expensive.
Aside from diapers, sanitary products, and fertilizers, inputs and raw materials for manufacturing agricultural pest control products—whether sourced locally or imported—will also face reclassification to exempt status.
Critics argue that this shift could further burden Kenyans already grappling with high living costs, especially after a public backlash halted a proposed Eco Levy within the repealed Finance Bill 2024.
The Eco Levy had been designed to impose taxes on products harmful to the environment, such as hygiene products, batteries, and plastic packaging. Aimed at mitigating pollution and managing waste, the levy sparked considerable controversy before its removal.
Now, the proposed reclassification under the Tax Laws (Amendment) Bill, 2024, is raising similar concerns among the public, with fears that consumers will bear the brunt of the tax changes.
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Why Diapers, Sanitary Pads, and Fertilizers May Soon Cost More
