KAM wishes to clarify Press reports terming manufacturers and retailers as “unscrupulous” for the recent increase in plastic bag prices. We commend the Minister for Finance for extending the effective date for implementing the 120% excise duty to October 1st as requested by industry. This was because manufacturers are not registered under excise duty and therefore immediate implementation of the tax measure after the budget speech meant closure of production and supply. The three-month transition period is intended to facilitate registration as government and industry consult over the most appropriate tax measure applicable for environmental conservation.

We wish to clarify that the tax measure of 120% excise duty was imposed at a time when manufacturers, KEBS and NEMA were implementing a new standard for plastic bag thickness, KS 1794:2003 (Amendment Slip No. 1, March 2007), which increased bag thickness from a wall thickness of 10 micrometres to 20 micrometres. The bag thickness measure is intended to facilitate re-use and recycling of plastic bags and to discourage consumers from discarding them in the environment. In essence, the increase in bag thickness has doubled the cost of bags by 100% from Ksh 284 to Ksh 569 per 1,000 size 9”X 15”, and Ksh 177 to Ksh 354 per 1000 bags size 7”X 12”. 2 When the minimum thickness goes from 20 to 30 micron in January 2008, the cost will go up further by 50% from ksh 569 to Ksh 854 and Ksh 354 to Ksh 531 respectively. Add to this the 120% excise duty expected to come into effect in October and the price shall be Ksh 1,878 per 1,000 size 9”X 15”, and Ksh 1,168 per 1,000 size 7”X 12”. This is why KAM is trying to persuade the government that the increase in bag thickness alone is sufficient to solve the environmental problem. Adding an excise duty will make the bags too costly for consumers and this will affect the cost of other goods as well. With the cost of plastic packaging going up by 660% by January next year, this will push the prices of basic commodities like bread, milk and sugar by 14%, 13% and 8% respectively. This week, KAM has signed a memorandum of agreement with the Kenya Bureau of Standards (KEBS) and National Environment Management Authority (NEMA) for immediate implementation of KS 1794:2003. Enforcement of the standard means prohibits the manufacture, importation, trade and commercial distribution of plastic bags of a wall thickness of less than 20 microns in Kenya. A thickness of less than 30 microns will be prohibited from 1st January 2008 as gazetted by the Minister for Finance vide Finance Bill 2007. - Source KAM Press Room