Kenyans may soon feel a heavier hit on their wallets as the Treasury unveils a bill that could drive up costs on essential items like diapers, sanitary towels, tampons, and fertilisers.

Treasury Cabinet Secretary John Mbadi has presented the Tax Laws (Amendment) Bill, 2024, in a bid to shift the status of these goods from zero-rated to exempt, stirring concerns over how it might impact household budgets across the nation.

In simple terms, zero-rated goods are currently free from VAT charges, and businesses can claim back tax credits on what they buy to create or import these products.

But if the Bill passes, these items will become exempt, meaning no VAT will be added on their sale—yet businesses would lose the ability to reclaim taxes on production costs.

As a result, consumers may see prices rise as sellers look to cover these unrecovered expenses.

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Mbadi insists this shift is necessary, describing the reclassification as a strategic move to help close the country’s growing fiscal gap by reducing revenue loss from tax breaks.

"The decision to reclassify the items was attributed to reducing the government's revenue loss from tax breaks issued to specific groups or activities," he explained.

The proposed Bill is part of a broader plan that includes the Tax Procedures (Amendment) Bill, 2024, and the Public Finance Management (Amendment) Bill, 2024.

Together, these measures aim to boost government revenue as part of an economic strategy to stabilise and support the nation's recovery.

The ripple effect of these potential tax changes has drawn mixed reactions, with critics viewing the Bill as a veiled attempt to raise taxes on everyday essentials despite a loud public outcry that led to the shelving of the Eco Levy in the now-repealed Finance Bill, 2024.

The Eco Levy aimed to impose taxes on environmentally sensitive products like hygiene goods, batteries, and plastic packaging to tackle waste management challenges.

If passed, the amendment may also affect agricultural inputs, impacting costs for both local and imported raw materials used in manufacturing pest control products.

For now, all eyes remain on Parliament, where Kenyans await to see whether this new tax trajectory will indeed go forward and what the true cost will be for families.