EABL Group chief executive Andrew Cowan. FILE PHOTO | NMG
Beer and spirits manufacturers have raised the alarm over
possible increased in taxes saying it will hit sales and State revenues
while hurting the fight against illicit brews.
The
manufacturers through their lobby, the Alcohol Beverages Association of
Kenya (ABAK), say persistent tax hikes leave legitimate players in the
industry facing uncertainty in their investments and business planning.
The
ABAK alert comes as Kenya enters the final stretch of budget making
amid fears the government will target alcohol and cigarettes, the main
sources of ‘sin’ taxes, to drive excise tax revenue.
“Our
industry is facing tough times on the back of persistent increase in
excise tax. The government will have to think very hard about broadening
the tax band, rather than ruining gains made in our industry over the
years,” said Gordon Mutugi, ABAK Chairman.
ABAK noted
that a study it commissioned last year showed that increasing the price
of legitimate alcohol has been shown to push drinkers to illicit brews,
and deny state taxes.
“Volumes for a number of excisable goods have been on the decline resulting in lower excise collections,” said the lobby.
The
government raised excise duty on alcohol by 5.17 percent from last July
raised the tax charged on wines and whisky by up 25 percent.
In
2018, the excise duty was raised by 5.2 percent, underlining Kenya’s
position of having one of the highest rates of tax on beer on the
continent. Close to half of Tusker’s recommended retail price goes to
the taxman.
“There’s sufficient evidence to demonstrate
that optimum benefits can only be derived when our products are taxed
only to some point,” EABL
group CEO Andrew Cowan said earlier.
EABL
reported a 1 percent decline in sales of bottled beer such as Tusker in
a soft economy that has delivered job cuts and stagnant wages, hurting
consumers’ purchasing power.
ABAK is now encouraging
bar owners to sell drinks at lower recommended prices to protect sales
and stop the flow of drinkers to illicit drinks.
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