Who will be smiling, who will be in tears in 2018
6 months ago, 4 Jan 00:11
Prices of some basic consumer commodities are expected to increase because of new taxation measures that came into force on January 1. Gamblers, who were slapped with higher taxes have protested, but consumers too will have to pay more following expiry of a Government subsidy that facilitated low-cost maize flour. Yesterday, the price of Alpha Grain Millers’ Kifaru maize flour rose to retail at Sh185 per two-kilogramme packet and Hostess maize flour at Sh149, three days after close of the subsidy that saw the commodity sell at Sh90 for more than six months. Retailers expect milk and sugar prices, which similarly enjoyed subsidies, to be adjusted upwards in the coming days (see separate story on page 7). However, it will all be good news for pensioners and low-income earners who will be spared the taxman’s wrath. Also to enjoy some tax relief are consumers of cooking gas (liquefied petroleum gas, LPG), motor vehicle assemblers and investors in special economic zones. The changes to the tax regime were announced in the budget speech in March 2017 but came into force this week. For the losers, this will be doubly painful. The punitive tax measures come at a time when parents - most of whom splurged the little cash they earned from a difficult 2017 on festivities - are now racking their heads on school fees. Starting January 2018, the poor will be denied the only reprieve they had in a turbulent 2017 - lower prices of basic food commodities including maize flour, milk and sugar. The subsidies have come to a screeching end to hit poor folks who spend over a third of their income on food. Lovers of ugali have since last year bought a two-kilogramme packet of maize flour at Sh90 and a kilogramme at Sh47 since May, 2017. With the market forces being allowed to take over from Monday this week, the price of unga has immediately shot up by an average 80 per cent. This will hurt the pockets of millions of poor Kenyans for whom ugali, whose main ingredient is maize flour, is a staple. The phasing out of the maize subsidy programme will also hurt importers, including cereal millers, who pocketed a cool Sh9 billion from the Government to ensure the discounted prices prevailed. “We’ve agreed that the subsidy programme will officially come to an end on December 31,” said Agriculture Cabinet Secretary Willy Bett in a press conference. Bett would later on assure consumers that he would not let the price of a two-kilogramme of maize flour go beyond Sh120. A duty waiver on sugar and powdered milk imports, which was introduced in June 2017, also came to an end last month, raising fear that consumers might be staring at a high cost of living in 2018. After a crippling drought that ravaged the country, prices of maize flour, milk and sugar last year went beyond the reach of the common mwananchi, forcing the Government to intervene by removing import duties on the three ...
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