Published On: Sat, Aug 13th, 2016

Industrialists write to CS Rotich over biting duty on plastic bags

Manufacturers have petitioned the National Treasury to revise the excise duty on packaging products, warning of a likely down-scaling of the industry worth more than Sh20.5 billion in capital investment.

In a memorandum to the National Treasury Cabinet Secretary Henry Rotich seen by the Star, the Kenya Association of Manufacturers wants the amendment to the Excise Duty Act in this year’s Finance Bill removed, and replaced with the old regime.

plastic products

Industrialists write to CS Rotich over biting duty on plastic bags

KAM has warned of an imminent closure of some of the about 173 factories which make plastics and rubber products, saying the decision might make about 500,000 people lose their jobs.

The lobby claims more than 12 companies in Nairobi have stopped production since last December, while some have slowed down operations.

“People have lost their jobs and those remaining in employment face a very uncertain future. The halting in production of certain goods by the plastic industries led to loss of jobs,” KAM says in the 13-page memorandum dated July 8, delivered this week.

The amendments to the Excise Act 2015, which became effective June 9, now include other plastic bags used interchangeably with the shopping bags. Vacuum bags for packing food, juices, tea and coffee are, however, excluded from paying excise duty.

KAM wants the National Treasury to form a working committee to consider proposals submitted during the 2015-16 budget making process.

“ The committee should include the National Treasury, the Kenya Revenue Authority and the KAM,” the memorandum by KAM chief executive Phyllis Wakiaga reads.

Last month, Wakiaga said the lobby had proposed to the Treasury to reduce by half or zero-rate the products from the Sh120 per kilogramme of plastic shopping bags, but the proposal was ignored.

“The imposition of the excise duty at Sh120 per kilogramme has the destructive impact of increasing prices of plastic bags and sacks by a whopping 60 per cent,” Wakiaga said.