State mulls reintroduction of proposal to increase tax on imported sugar

Treasury CS John Mbadi has hinted at the plan to bring back the proposal to increase excise duty on imported sugar from Sh5 to Sh7.5 per kilogramme to protect the local industry.

The proposal was contained in the withdrawn 2024 Finance Bill that he categorically stated is dead and buried.

In an interview with one of the local dailies on Thursday, CS Mbadi defended the plan, stating that it is one of the progressive measures in the bill that will be reviewed in subsequent parliamentary procedures.

"There are so many provisions that were in that bill that were not contentious, some of them progressive," Mbadi said.

"Why would one reject an amendment of the excise duty on imported sugar to protect our local sugar industry on the basis that it was in the 2024 Finance Bill?" he posed.

He added that such a move would champion the protection of our local sugar industry.

"One of the reasons our local industry is dying, making sugar expensive for Kenyans, is because we have not supported the industry enough, and thus any initiative to support that industry should be our priority." "The move will also ensure we are creating more jobs for Kenyans," he added in part.

However, the CS appears to be reading from conflicting scripts regarding the use of taxes to defend local industries.

In June of this year, CS Mbadi, then the legislative chairman of the public accounts committee, stated that a protectionist policy would be detrimental to the economy.

"I do not think protecting industries will in any way make them competitive in the market," he noted.

He instead noted that the country needed to look into the factors of production such as energy cost which most manufacturers are grappling with.

The current reasoning behind the move to reconsider the proposal to increase the tax on imported sugar also differs from his predecessor's motive of introducing the tax in the first place.

While reading the first Kenya Kwanza's Budget in Parliament in June 2023, the former Treasury CS Njuguna Ndung'u, proposed the introduction of the excise duty on imported sugar at a rate of Sh5 per kilogramme.

The proposal was effected after the president signed the 2023 bill into law on June 26, 2023.

The plan, however, did not include sugar imported or acquired locally by registered manufacturing pharmaceuticals for use in the production of medicinal products.

Ndung'u said the move was to discourage sugar consumption in the country, which has been associated with various ailments such as diabetes which is becoming common in many families.