Economy
Sugar products and alcohol taxes to rise
Friday September 15 2023
Consumers of spirits and other higher alcohol-content products escaped new taxes in the current financial year but now look set for an upward review. PHOTO | SHUTTERSTOCK
Alcohol, cigarettes, betting, and sugar-based product taxes are expected to rise in what the Treasury ties to promoting healthy living and curbing other negative effects such as addiction.
The disclosures in the draft three-year tax revenue strategy starting July 2024 will see tax rises, leading to an increase in the prices of listed products.
The government will review the tax regime for sugar-sweetened non-alcoholic beverages to base taxation on sugar content to discourage consumption and “prevent obesity and diet-related non-communicable diseases,” says the Treasury.
The proposal will add to the recent one in which the State in July introduced a Sh242.29 per kilogramme tax on locally manufactured sugar confectionery, including white chocolate also citing the need to promote healthy living.
Read: State mulls Sh20 least betting amount
Consumers of spirits and other higher alcohol-content products escaped new taxes in the current financial year but now look set for an upward review.
“Government will increase excise duty on spirits and other higher alcohol content products to discourage their consumption, as they pose higher health risks,” says the Treasury.
The Treasury says the tax hike will be informed by quantitative analysis to determine the optimal tax rate that will apply to each alcoholic product.
At the same time, the State will increase taxes on filtered and non-filtered cigarettes as well as other tobacco products. The Treasury says it will harmonise excise duty rates across all tobacco products to promote fairness.
“Given the negative health externalities of these products, the rates will be based on the extent of the externalities as well as recommendations of the ongoing East African Community partner states study”.
The betting and gaming sector will also not be spared, with the government saying it will review the excise duty to “fully address the negative externalities.” It also aims at achieving real-time transmission of revenue and data to ensure full compliance.
This comes as the State mulled restricting the staking amount for gamblers to amounts of not less than Sh20.
The Betting Control and Licensing Board (BCLB) has proposed the minimum stake for online gaming and those using gambling machines.
Currently, gamblers stake less than Sh5, which has made betting cheap and fuelled rapid growth among young people and vulnerable persons hoping to win millions in prize money.
“A player in an online gambling activity shall not bet an amount of less than twenty shillings in a competition,” BCLB says in the draft Gambling Control Bill, 2023.
“The minimum amount set above shall be inclusive of such a saving component for the player as shall be determined by the Authority in consultation with the Cabinet Secretary.”
Betting firms and gambling machine operators who flout this requirement will be fined Sh5 million or imprisoned for a term not exceeding six years.
Read: Alcohol, cigarettes spared tax hikes for first time in 5 years
A few firms, including Betika and Milestone Gaming (trading as SportPesa), have fixed the minimum betting amount at Sh50 to make gambling relatively expensive for the unemployed and youth.
