This archive report was first published on 9 July 2020.
On July 9, 2020, Parliament made a timely decision to halt the automatic annual increase in excise taxes on a wide range of consumer goods.
This move is particularly welcome as the country grapples with the economic impact of the COVID-19 pandemic.
The automatic annual increase in excise taxes on commodities such as bottled water, juice, and beer was set to take effect at the start of July 2020, in line with the rate of inflation.
However, the government has now postponed the increase until January 2021, giving consumers much-needed breathing room to recover from the lockdown effects.
The amendment to the Finance Act requires the Cabinet Secretary for the National Treasury to approve the rate of excise duty adjustment, providing an opportunity to take into account the prevailing economic situation.
As the country navigates high inflation rates, setting a tax to rise with the cost of living is unsustainable, as the two would feed on each other.
