Nairobi, June 1 : The World Bank, in its Public Finance Review report on Kenya, has issued a raft of proposals aimed at improving the country's fiscal sustainability.
The Bretton Woods institution, has recommended a 16 per cent value-added tax (VAT) on several goods such as Avocado, meat, wheat flour, toothpaste, and coffee, warning that their tax-exempt status is costing the country billions in lost revenue.
The lender argues that taxing these items would expand fiscal space without burdening the poor, as they form a minor part of low-income households’ spending.
In its latest review released on Tuesday, the World Bank called on the Kenyan government to remove the products from the VAT-exempt schedule and subject them to the standard 16 per cent VAT rate. The report notes that suppliers currently do not charge VAT on these exempt items, causing the state to forgo billions in tax revenue.
