Posted on September, 19, 2018 at 11:03 am
Millers will hike the price of unga by Sh8 from Sh90 to Sh98.
More than 94 small-scale millers met last week and agreed to increase the price. But if President Uhuru Kenyatta’s proposal for the eight per cent VAT increase — not 16 per cent — stands, millers will increase the price by only Sh4.
United Grain Millers Association chairman Peter Kuguru said millers who met in Nairobi on Wednesday agreed to increase the price of a two-kilo packet of maize flour from Sh90 to Sh98.
Small-scale millers make up 70 per cent of the milling capacity in Kenya. Large-scale millers under the Cereal Millers Association make up 30 per cent. In an interview with the Star yesterday, Kuguru said they will pass half of the 16 per cent levy on to the consumers while the millers will take up the other half.
“We will not put all the burden on the consumers as unga will be too expensive. Kenyans are already loaded with fuel increase. We will share the 16 per cent petroleum levy with consumers to reduce the burden.”
On Friday, Uhuru returned the Finance Bill 2018 to the National Assembly with a new proposal to have the VAT slashed from 16 per cent to eight per cent. The move was opposed by most legislators who said any VAT on fuel will hurt Kenyans and increase the cost of living.
MPs are to meet Thursday to continue discussion. Many want to overturn the President’s proposal for an eight per cent levy and revert to the initial bill that set VAT at 16 per cent — suspended until 2020. “Either way, the price will remain at less than Sh100 and we hope this will remain so, especially if we get a bumper maize harvest,” Kuguru said. On September 4, the Cereal Millers Association issued a notification of price increase for maize and wheat flour due to the recent surge in the cost of production.
Chairman Mohamed Islam said with the introduction of VAT on fuel, transportation costs will increase twofold.
“Millers have to absorb costs from the grain handling facilities to the millers and from the millers to the retailers. The newly introduced VAT on fuel will have an additional ripple effect on the cost of electricity, packaging and other costs of production.”
Millers are to meet with Agriculture CS Mwangi Kiunjuri this week to discuss the VAT increase.
Source: The Star