Treasury Cabinet Secretary Njuguna Ndung’u stated in his Budget statement on Thursday that the duty, which will be passed on to the final consumer, is intended to discourage sugar consumption for health reasons.
The staple, on the other hand, is a constant in almost all houses and, along with bread, flour, rice, and milk, is one of the most widely eaten household food products.
Sugar prices have risen to over $675.69 (Ksh94,400) per tonne due to a global scarcity, up from $560.46 (Ksh78,301) in February.
The Kenyan market is also experiencing a scarcity, with the country’s weekly ideal stock dropping by 80% as a result of reduced factory output and costlier imports, pushing retail prices to an all-time high.
“Consumption of sugar has been associated with various ailments such as diabetes, which has become common in many families,” Prof Ndung’u explained.
“To discourage sugar consumption, I propose to the National Assembly that an excise duty of Ksh5 per kilogramme be imposed on imported sugar, excluding sugar imported or purchased locally by registered pharmaceutical manufacturers for use in the manufacture of pharmaceutical products.”
The tariff would have also applied to local sugar under the Finance Bill 2023 if the National Assembly’s Budget and Finance Committee had not changed the Bill to stipulate that it would only apply to imported products.
Other household staples, including as rice and wheat, were granted preferential treatment by the Cabinet secretary in the Budget, with lower import duties.
Prof Ndung’u stated that due to insufficient local production of the two crops, Kenya would import rice at a 35% cost rather than the 75% rate stipulated under the EAC Common External Tariff.
Wheat imports will also be subject to a 10% duty rather than the 35% specified under the EAC Duty Remission Scheme.
The importation of wheat will be performed on the suggestion of the Ministry of Agriculture, and wheat millers will be required to purchase local wheat first before being permitted to import,” said the CS.
During their annual pre-budget consultations, EAC finance ministers also decided to extend a slew of special tax policies aimed at bolstering Kenya’s manufacturing sector.
These include allowing Kenya to continue importing baby diaper inputs tariff-free for another year, as well as charging imported diapers 35% duty for the year to safeguard local manufacturers.
Kenya was granted a similar window for duty-free imports of raw materials and inputs for the manufacture of footwear products and roofing tiles, as well as imports of inputs for the manufacture of animal feeds, to address the product’s high cost, which has contributed to the country’s high food prices.
