Speaking yesterday,
Ruto, through UDA Communication Director Arnold Maliba, explained the
government’s rationale behind the proposal to add Value value-added tax on basic
commodities such as bread and milk.
According to
Maliba, the government resolved to remove the two products from the
VAT-exempt list as a means to reduce the recurrent expenditure within the
national budget.
Maliba opined that the
government had been spending huge sums to reimburse manufacturers through tax
returns for Zero-rated commodities.
“At the moment, bread
and milk are zero-rated, meaning the suppliers and manufacturers normally then
claim refunds on inputs they paid (for). The two products attract the highest
expense in tax, which the government would reimburse,” stated Maliba.
For a “zero-rated
good,” the government doesn’t tax its sale but allows credits for the
value-added tax paid on inputs, which allows the manufacturers to claim
reimbursements from the government.
However, if a product
or business is “exempt,” the government doesn’t tax the sale of the product,
but producers cannot claim a credit for the VAT they pay on inputs to produce
it.
He further alluded
that taxing bread and milk would ease the cost burden of shouldering the tax
burden on those who do not consume the products.
According to Maliba,
there are alternatives for Kenyans such as unprocessed foods like arrow roots
and unprocessed milk.
Therefore, Maliba
opined that Kenyans can consume the alternatives without coughing up the funds
for bread and processed milk after the VAT addition.
The Kenyan DAILY POST
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