The Kenya Association of Manufacturers (KAM) has expressed concern over the imminent increase in bread prices following tax proposals targeting bread packaging.
Speaking during an interview on Thursday, May 5, Job Wanjohi, who is the head of policy research and advocacy at KAM, projected that bread would increase by Ksh9 over the proposed introduction of the eco levy.
Wanjohi explained that the eco levy was targeting the manufacture of plastic bags which are to store bread.
According to the Finance Bill 2024, every kilogram of plastic bag will see the government impose a Ksh150 levy.
Therefore, with the increase in the cost of production, bread bakers will be forced to pass done the additional cost to the consumers.
"This eco levy is likely to increase prices for all plastic packaging materials, batteries, and hygiene products.
"For example, the Ksh150 levy per kilogram of plastic packaging will increase the cost of a 400-gram loaf of bread by Ksh9 from Ksh65 to Ksh74," he stated.
On the other hand, he also cautioned that other household items such as cooking oil will also increase because of the levy because of the indirect taxes that target them.
Should the eco levy be introduced, 1 litre of cooking oil will increase by Ksh16 while powder detergents will increase by Ksh30.
Initially, bread was targeted for the 16 per cent VAT. However, following an uproar, it was revealed that the decision would be reversed given that many Kenyans use bread for breakfast.
According to the National Assembly Finance Chairperson Kimani Kuria, the VAT on bread was proposed by the National Treasury over the rising concern for lifestyle diseases.
"We had a very long conversation with Treasury. The initial thinking was that there is concern about diabetes," he stated.
However, he stated that the proposal was counter-productive given that it would increase the cost of living.
"In addition to bread that is baked in the supermarkets, some are baked in informal shops and if we tax bread, people may move from the formal bread and move to those that are baked by the roadside. That could lead to more health concerns," he opined.
