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Water and juice makers warm up to stamp fees cut

National Treasury Cabinet Secretary Henry Rotich

Manufacturers of water and juices have welcomed the decision by the National Treasury to cut excise stamp fees on their products, saying it will boost their businesses.

National Treasury Cabinet Secretary Henry Rotich offered players in the non-alcoholic beverages a reprieve by halving excise stamp fees in new tax measures.

In the changes contained in the special issue of gazette notice issued by Rotich, from a flat rate of Sh1.50 on each unit sold to consumers, the items will now attract Sh0.60. This has been warmly received by water and juice manufacturers in the country.

Paul Chege, the CEO of Highlands Mineral Water Company, has welcomed the move to charge exercise stamp from a fixed cost to a variable cost noting that low cost manufacturers were already struggling with high input costs. Highlands Mineral Water is a firm that manufactures water, juices and soda.

Mr Chege said he would have loved total revocation of the cost, but was grateful for the latest gesture by the Government. “We are already struggling with a rise in input cost which we would not prefer to pass on to consumers,” said Chege. The highest input cost is that of packaging.

“In exercise of the powers conferred by section 2 of the Provisional Collection of Taxes and Duties Act, the CS orders that all provisions of the Bill relating to taxes or duties shall have effect as though the Bill were passed into law,” said Rotich on laws that were effected on April 3.

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However, mineral and aerated water will be Sh0.50 per stamp. Relaxation of stamp fees means that mineral water, fruit juices, cosmetic products and non-alcoholic beverages could see a drop in prices depending on the cost savings that manufacturers may derive from Rotich’s gesture.

COUNTERFEIT ALCOHOLIC PRODUCTS

However, beer, cider, merry, mead, opaque beer and mixtures of fermented beverages with non-alcoholic beverages shall still attract a fee of Sh1.50 on each stamp.

At the same time, cigarettes containing tobacco or tobacco substitutes, wines, spirits and other alcoholic beverages obtained by fermentation of fruits have been hit. Each stamp will now attract Sh2.80 as fees, up from Sh1.50.

This may see consumers of such products incur more at retail outlets should manufacturers decide to pass this additional cost to the customers.

Even alcoholic firms such as Africa Spirits Limited have welcomed the tax proposals outlined by Rotich. The firm notes that some of the tax proposals will provide a good foundation to curb the sale of counterfeit alcoholic products. In the 2017/2018 Budget Speech, Alcoholic beverage manufacturers will now enjoy a graduated excise management goods tax rate; ranging from Sh0.50 to Sh2.5 depending on the cost of the product.

Previously, the Excisable Goods Management System (EGMS) has been applying a uniform cost of stamps irrespective of the cost of the product.

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Africa Spirits Managing Director, Mr Chris Lucas said the EGMS system when properly implemented would be a big win towards the fight against counterfeits and illicit liquor. “The new security features on the new stamps that come with the EGMS system will make it easier for the Kenyan consumers to identify and choose safe alcoholic beverages,” he said. [Dominic Omondi]

 

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