MP Explains VAT on Bread as Measure to Control Diabetes in Kenya

National Assembly Finance Chairperson Kimani Kuria on Thursday, April 17, clarified the Treasury's proposal to impose VAT on bread in the Finance Bill 2024.

During an interview on Citizen TV, Kuria revealed that the proposal was driven by concerns over the rising incidence of diabetes in the country. He explained that the Treasury aimed to address this lifestyle disease by discouraging the consumption of bread.

The Finance Bill 2024 proposes to remove bread from the list of VAT-exempt goods and instead subject it to a 16 percent VAT. This change would raise the price of a 400-gram loaf of bread by more than Ksh10, increasing the current price of Ksh65.

"We had a very long conversation with Treasury. The initial thinking was that there is concern about diabetes," Kuria stated.

However, he acknowledged the public's displeasure with the proposal, as bread is a staple food for many families.

The MP noted that some experts argued the move might be counterproductive, as many households might opt for cheaper, potentially less safe alternatives.

"The argument we are receiving from Kenyans is that bread is not a luxury good. It is something that people will have every morning for breakfast. All these are proposals. In addition to bread that is baked in the supermarkets, some are baked in informal shops and if we tax bread, people may move from the formal bread and move to those that are baked by the roadside. That could lead to more health concerns."

In light of the public's concerns, Kuria encouraged Kenyans to provide feedback on the proposal to allow for possible amendments.

According to Kuria, bread could be either VAT-exempt, zero-rated, or subject to a 16 percent VAT.

The Treasury's Medium Term Revenue Strategy had also considered increasing taxes on sugary products to combat lifestyle diseases, with the proposal initially focusing on taxing the most common sugary products.