16% VAT proposal by the Treasury

Brian Mang’oli

According to the Treasury, the sum of Value-Added Tax (VAT) collected constitutes approximately 40% of the overall revenue.

However, a significant proportion of this revenue, approximately 18%, is allocated to tax refunds for products presumed to be consumed by the lower-income population. Notably, the majority of these refunds, approximately 95% are directed towards the purchase of bread and milk.

This allocation of funds implies that the competition for these products is not among the lower-income population but rather amongst the middle class.

In addition, the CS says the government is now exploring a mechanism through which consumers will be able to bring their  refund claims directed to the KRA generated at the point of purchase of zero-rated goods and products considered necessary such as food items animal products sanitary products these items make them more affordable to low-income consumers in the country.