Manufacturers have lost a bid to block higher excise duty on locally manufactured plastic items, signalling higher prices of packaged products.
The firms, suing under the ambit of the Kenya Association of Manufacturers (KAM), wanted the court to quash the decision of the National Treasury to introduce an excise duty of 25 percent per kilogramme of locally manufactured plastic products.
The items affected by the increased tax include packaging material, plastics stoppers, lids, caps, and other closures of plastics. Others are carboys, bottles, flasks, and similar articles of polyethylene.
The manufacturers cited lack of sufficient public participation by the National Assembly during the enactment of the Tax Laws (Amendment) Act 2024.
They said the excise duty was proposed at the parliamentary committee stage of the legislation and it was not subjected to fresh public participation.
But Justice Bahati Mwamuye dismissed the petition after finding that the process leading up to the enactment of the Act followed all lawful processes by the Constitution.
He said the Act was not invalid as claimed by the lobby group and that it ought to have been diligent, proactive, and participated in the legislation process, since matters touching on taxation were core to its mandate.
“They cannot therefore be heard to state that there was no public participation while all along they were aware of the process but chose or failed to participate in it,” he added.
“I find that a reasonable opportunity was given to the public, interested parties, and relevant stakeholders to advance their views but they opted not to,” said the judge.
The petitioners included Ashut Plastics Ltd, Sanpac Africa Ltd, Nairobi Plastics Ltd, Techpack Industries Ltd, and Blowplast Ltd.
The court heard that the suggestion to introduce excise duty on domestic plastics was made by two stakeholders namely; Westminister Consulting and Sanaabil Consulting, which proposal was accepted and enacted into law.
The petitioners wanted the court to issue an order compelling the National Treasury to allow local manufacturers of plastic products to continue operating in the old legal regime.
Previously, the excise duty only applied to imported plastics at a rate of 10 percent but this was amended through the Tax Laws (Amendment) Act 2024 to include locally produced plastics as well.
The petitioners said the changes in the Act were enforced without consultations. Provisions of the amended Act took effect on December 27, 2024.
They sued after the KRA started enforcement of the amended Act by requiring them to apply for registration, licensing, and issuance of certificates as manufacturers of locally produced plastics.
They stated that it would be impracticable for them to comply with the new imposition of excise stamps on their products without sufficient notice and process of changing the system and procedures.
Further, they complained about the lack of information on the implementation of the new system and the registration process.
According to them, the process would lead to closure of their manufacturing plants pending registration leading to penalties and fines for failure to comply with the new regulations and tax system.
Another complaint was that since the Bill was subjected to roughly six days of public participation in seven counties, the public participation could not be said to be reflective of a fair representation of all persons affected by the taxation as it only featured a select number of counties in select regions.
However, Justice Mwamuye stated that the National Treasury and the National Assembly adduced sufficient evidence that they made an effort to collect views from the public and even considered the said views in amending the Act.
The court found that the aggrieved manufacturers were aware that the Bill was being debated in Parliament.
“I am not persuaded that there wasn’t any or sufficient public participation carried out in respect of the amendment Act. In my view, the Respondents’ actions subjected the Act through the constitutional compliance step of public participation,” said the judge.
