The Kenya Association of Manufacturers (KAM) has opposed plans by the National Treasury to increase excise stamp fees on a number of goods terming the move as counterproductive to the country’s manufacturing competitiveness.

KAM Chairman Rajan Shah says the increments as proposed under the Excise Duty (Excise Goods Management System) (Amendment) Regulations, 2023 will also be detrimental to quest by the government to lower cost of living.

“The proposed increment up to levels of over 100pc and beyond the current market costs of producing the stamps shall have a detrimental effect on consumers and manufacturers due to increased cost of production and the cost of finished products which will be passed on to the consumer amidst the rising cost of living,” said Shah.

Should the law be amended, consumers are expected to pay more for items which include juices and any other non-alcoholic drinks, cosmetics, alcoholic beverages, tobacco and nicotine products and export products effective March 1, 2023.

According to Shah, the excise stamp is a revenue assurance tool that was initiated to deter counterfeiting, ensure traceability of excisable goods along the supply chain, enable accounting to produce excisable goods manufactured or imported and facilitate any persons in the supply chain to authenticate the stamps and excisable goods.

 As such the proposed drastic increase of cost of stamps seek to be a revenue collection mechanism as opposed to an assurance tool, the lobby group said.

“We are afraid that such increment to one of the most counterfeited items in Kenya will further encourage the counterfeit and illicit trade. This will deny government revenue and put lives of Kenyans at risk as substandard and highly dangerous goods infiltrate the market,” added Shah.

KAM projects that enactment of the law will lead to reduced government revenue from low sales which will in turn have a negative effect to other revenue streams from manufacturers such as VAT, PAYE and Income Tax among others. 

Shah says the planned fees hike could also mean job losses as manufacturers shed workforce to accommodate the extra cost.