Consumers should prepare for tough times ahead beginning July after a new law proposing to drop Tax exemptions on consumer goods is passed by parliament. This law will effectively see zero rated commodities pay Value Added Taxes in the tax man’s bid to increase his income base.
The Treasury expects the new VAT law that ends most exemptions and zero rating on most goods to be in place by June, clearing the way for the taxman to collect billions in additional revenues.
Dropping of exemptions will see rise in prices of essential goods and zero rated importations go up as the tax man puts a tag on them. Affected will be food items such as wheat, maize, sugar and rice as well as agricultural inputs, pharmaceuticals and computers and computer accessories.
Prices of petroleum products, Liquid petroleum gas (LPG) and other fossil fuels will also be on the rise. Treasury is looking at all means possible to finance the Sh1.45 trillion budget t0 handle the newly introduced county governments and the March 2013 general election.