Is Safe Water a Preserve of the Wealthy?

By Philip Muema, Managing Partner, Andersen Tax in Kenya (philip.muema@AndersenTax.co.ke)

The roll-out date is set for the 13th November 2019. The Excisable Goods Management System (EGMS) will see to it that excise stamps are affixed on bottled water, and with the aid of the software system and fibre optic cable, track the production, distribution and sale of bottled water in the country. What all this will serve to do, is increase the cost of bottled water in the country. Wanjiku will have to pay more for safe water.

Let us take a critical look at this situation.

According to Sustainable Development Goal 6: Clean Water and Sanitation, the government of the day is meant to ensure the availability and sustainable management of water and sanitation for all. It should provide equal access to sufficient, and affordable water. How much water would be determined to be sufficient water? According to the World Health Organisation, to fulfill basic needs, one person should have access to 20 litres per day which would be at most, 1,000 meters or 20 minutes away. Article 43 of The Constitution of Kenya states that every person has the right to clean and safe water in adequate quantities. This is similar to the requirements by the SDG 6.

Reports in Nairobi show that most homes, especially those in the low-income neighbourhoods, receive City Council water only once a week. To sustain their daily needs, they are forced to purchase water from water vendors in their neighbourhoods whose water source is unknown. According to the same report, some of the water vendors are said to have sunk boreholes to harvest groundwater which, unfortunately, is being contaminated by the spillage from burst sewer pipes.

Residents of these neighbourhoods are then forced to purchase bottled water for their consumption needs; drinking and cooking. This makes bottled water a necessity, not a preserve of the well to do.

Back to the Excise duty situation.

The Revenue Authority would like to see to it that the players in the water bottling business pay their requisite taxes. I agree with them, that institutions in business should pay requisite taxes such as income tax. However, in this instance, we are talking about imposing new rates on the commodity. An essential commodity. A commodity that the government should be availing to its people but is failing in this duty.

In supplying this life-sustaining commodity, if the government is unable to provide it in sufficient quantities, then the support offered by the private sector should be accepted, neigh, encouraged. The Center for Public Finance and Tax at the Institute for Certified Public Accountants of Kenya (ICPAK), had noted the need to support the provision of clean and safe water by the private sector and had proposed the zero-rating of the importation of water purification machines and accessories. This would reduce the cost of production greatly and make bottled water more affordable.

The new EGMS system by the Kenya Revenue Authority is being set up to deter counterfeiting and account for production by tracking the stamps. This is extremely valuable in ensuring that bottlers can be held to account for the safety of the water in each bottle. For this reason, I would implore the revenue authority to charge the water bottlers only the value of the stamp per bottle, which must be fractionally cheaper than Kshs 0.50 because of the economies of scale they are gaining from printing millions of stamps to serve the bottling industry.

Clean and safe water is a commodity required to sustain life. We cannot in clear conscience impose new taxes on it and push it out of the reach of the majority who need it more. We need to run our institutions holding firmly to the greater good of the citizenry.

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