Bottled water prices to increase from next week

The price of bottled water is expected to increase by an average Ksh.7 per litre as the Kenya Revenue Authority (KRA) moves to implement new excise taxes on the non-alcoholic beverage from Wednesday next week.

Speaking on Thursday, members of the Water Bottlers Association of Kenya (WBAK) said they have no choice but to pass on the additional costs which incorporate Value Added Tax (VAT) to consumers.

Even so, the Association has criticized the implementation of the new taxes which require bottled water manufacturers to install new generation excise stamps on bottled water, cosmetics, juices, soda and other non-alcoholic beverages under the Excisable Goods Management System (EGMS)

“The water that people use on a daily basis is going to be unaffordable. This means that under the economic hardships, people may choose to turn their contained spend away to more crucial goods,” WBAK Chairman Henry Kabogo said.

Manufacturers have previously lamented the implementation of the long outstanding tax seeing it as an additional burden to the already high cost of production worsening the competitiveness of locally produced goods.

“Currently the excise stamp costs Ksh. 1.50. This will greatly increase the cost of production for manufacturers and for consumers as well,” noted the Kenya Association of Manufacturers (KAM) in an earlier statement.

New excise taxes on the non-alcoholic beverages were first introduced in the Excise Duty Bill, 2015 whose subsequent enactment replaced the Customs and Excise Act, Cap 472 in a means to modernize the excise duty legislation through the simplification of tax processes.

The new proposed excise rate of Ksh.5 replaced the old charge of Ksh.3 or an equivalent five/seven percent of total product’s cost.

Previous attempts to implement the duty fell through the combination of litigation and extensions resulting from the observed unpreparedness by litigation and extension resulting from the observed unpreparedness among manufacturers by the tax man including most recently, the extension of the revised September 1 deadline.

Any listed products without the excise stamps, manufactured or imported after November 13 shall be confiscated by tax enforcement agencies and offenders prosecuted.

Meanwhile, KRA will allow the sale of already circulating products without the stamp to the end of January next year.

The implementation of the EGMS sits alongside the government plan to raise a projected Ksh.3.6 billion in new revenue streams and serves to close the gap to expected tax collection to cement years of missed revenue targets.