Senator Sifuna, MP Kaguchia oppose proposal to impose VAT on bread, milk

Some members of parliament have opposed Treasury’s proposal to introduce a 16 per cent value-added tax on bread and milk.

The proposal was revealed by the Treasury Cabinet Secretary Njuguna Ndung’u on Wednesday, who said having bread and milk as zero-rated products has failed to cushion the poor households and instead benefited the middle class.

Zero-rated commodities are exempt from VAT because they are considered necessary. They include food items, sanitary products and animal feeds.

“Total VAT collected in Kenya comprises about 40 per cent of the total taxes but 18 per cent of it goes to tax refunds for products assumed to be consumed by the poor,” Ndung’u was quoted by Business Daily as telling a forum organised by the International Monetary Fund (IMF).

“When you look at those products, you realise 95 per cent of refunds go to bread and milk. Who goes to the supermarket to buy bread and milk? We are not compensating the poor; we are compensating the middle class.”

Nairobi Senator Edwin Sifuna on Thursday dismissed the treasury minister’s comments as alienated from the economic situation of ordinary Kenyans, saying bread and milk are consumed across the social classes contrary to Ndung’u’s argument.

“These are people who are out of touch with reality,” Sifuna said during a panel discussion on Citizen TV’s Day Break program, “Bread and milk are consumed largely by children, even in the slums. You cannot say this is a luxury item.”

Mukurweini Member of Parliament John Kaguchia on his part said the parliament won’t back Treausry’s proposal because it is against the push for a lower cost of living Kenyans have been calling for.

“What the government is looking at is lowering the cost of living and we are happy this has been happening over time… We don’t look forward to reintroducing higher prices for bread and milk,” Kaguchia said.

“Much as the government is looking at raising revenue, we have to consider the areas for that. Introducing a tax on bread and milk will raise the cost of living. It is not one of the things we will be supporting.”

He said the parliament would guide the exchequer “on areas they can and cannot touch.”