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Tax measures push oil prices up

Members of the public have started bearing the brunt of new tax measures that have been introduced in the 2020/2021 national budget.

Some of the tax policies introduced in this financial year included the upward adjustment of the tax free bracket, surcharges, and Value Added Tax on selected items.

However, the VAT on various commodities has seen a sharp rise in the prices of some of the products such as cooking oil.

A spot-check by Capital FM has found that cooking oil prices have gone up by at least K350.

In the current financial year, government revoked the VAT free status on refined cooking oil, introducing a 16.5% VAT on the product.

“Previously refined cooking oil was VAT exempt and manufacturers were not able to claim tax refunds on their input VAT,” the statement reads.

Mlusu added that the local manufacturers stand to benefit under the industrial rebate system where raw materials are imported without payment of duty.

However, contrary to the current price hike, Mlusu earlier ruled out such price adjustment.

“Arbitrary price increases especially by local manufacturers reflecting the full VAT adjustment on the refined cooking oil is not expected,” said Mlusu in the in the statement.

Bearing in mind that the cost of living keeps changing, such price hikes in various products would be covered by the revenues that would have to be made available through the increased tax free band.

Currently a 2 litre bottle of cooking oil is fetching between K2, 550 to K2, 700 in major retail stores.

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