In Summary
  • The bill seeks introduction of tax exemption on supply of maize flour, ordinary bread and cassava flour, wheat flour.
  • PwC said the overall effect of the government’s move will be an increase in the cost of basic commodities.
  • Last year, the Govt removed tax on bread, maize and wheat as year-on-year inflation surged to 9.04 per cent.

The cost of ugali, bread and cassava is set to rise if a bill tabled in Parliament last month is passed and signed into law.

The Tax Laws Amendment Bill, 2018 seeks to change tax status on maize, wheat and cassava from zero-rated to exempt.

But millers have warned that changing the Value Added Tax (VAT) status to exempt will lead to expensive flour, an added cost that will be borne by consumers.

“The impact of this move is that millers cannot recover VAT on input and hence increase in cost of flour, which will be passed onto consumers,” said Cereal Millers Association.

The bill seeks introduction of tax exemption on supply of maize flour, ordinary bread and cassava flour, wheat or meslin flour containing either of the ingredients by more than 10 per cent in weight.

COST OF LIVING

Audit firm PricewaterhouseCoopers (PwC) said the overall effect of the government’s move will be an increase in the cost of basic commodities.

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