Why Govt Has Proposed Tax on Bread and Milk

Why Govt Has Proposed Tax on Bread and Milk

Why Govt Has Proposed Tax on Bread and Milk

Arnold Maliba, the director of communication for the United Democratic Alliance (UDA), outlined the justification provided by the government for the proposed Value Added Tax on necessities like milk and bread.

Maliba claims that in order to cut down on ongoing expenses in the national budget, the administration decided to take the two products off the VAT-exempt list.

During a Citizen TV morning program, Maliba expressed her opinion that the government has been expending enormous amounts of money to compensate manufacturers for Zero-rated commodities through tax returns.

Since milk and bread are currently zero-rated, producers and suppliers typically request reimbursements for the ingredients they paid for. According to Maliba, the two items have the largest tax expenses, which the government will pay.

For a “zero-rated good,” the government doesn’t tax its sale but allows credits for the value-added tax paid on inputs, which allows the manufacturers to claim reimbursements from the government. 

However, If a product or business is “exempt,” the government doesn’t tax the sale of the product, but producers cannot claim a credit for the VAT they pay on inputs to produce it.

He further alluded that taxing bread and milk would ease the cost burden of shouldering the tax burden on those who do not consume the products.

According to Maliba, there are alternatives for Kenyans such as unprocessed foods like arrow roots and unprocessed milk.

Therefore Maliba opines that Kenyans can consume the alternatives without coughing up the funds for bread and processed milk after the VAT addition.

Maliba also mirrored the remarks made by Njuguna Ndung’u, the Treasury Cabinet Secretary, who had hinted that middle-class people only consumed milk and bread.

The CS went on to say that in order to compensate Kenyans rather than manufacturers, the government needs to establish a policy.

Nevertheless, the suggested payment of Kenyans at the time of goods purchase has not been carried out.

Kenyans will thus pay more for bread and receive no compensation for the additional VAT.
Furthermore, we discovered that the suggested substitutes, which include sweet potatoes and arrow roots, were more expensive than a loaf of bread after conducting a spot check.

A bouquet of three arrow roots, which would not be sufficient to feed a family of four, can cost up to Ksh150 in Nairobi.

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