Kisumu bar owners denounce 6.3% increase in excise duty on alcoholic products

Actors in the alcohol value chain have implored the government to scrap plans to increase taxes on alcohol products, saying the move would hurt the struggling industry.

The Kenya Revenue Authority (KRA) is seeking to adjust the 6.3% excise duty on alcoholic beverages by October 1 in the government’s desperate measure to respond to soaring inflation.

Thus, the sector would experience two major successive increases in excise duties in less than three months.

In July, the government passed the Finance Law 2022 which proposed an increase in excise rates on beer and spirits by 10 and 20% respectively.

This trend precipitated a spike in the prices of beer, bottled water, cider, fruit juices and other fermented beverages.

Liquor makers, through their umbrella organization the National Association of Hotel Bar Liquor Traders of Kenya (BAHLITA), have called on the state to protect the industry from the ever-increasing cost operation of their businesses.

“We oppose any further increase in the prices of public goods, especially in the face of the current difficult economic conditions. It is necessary to give time to investors in the bar and restaurant sector to recover from the effects of COVID-19,” said Erick Ogutu, National Vice President BAHLITA during a press conference in Kisumu.

The sector, Ogutu added, has been affected by the relentless increase in tax levies forcing consumers to shift their demands to cheaper illicit beers.

According to BAHLITA, alcohol consumption has fallen to less than 32% in favor of illicit beers, with beer brands being the most affected.

Ogutu pointed out that the upward tax adjustments are having a negative impact on the distribution of locally produced finished products and retail liquor trade, resulting in a loss of employment income of 15.7 billion shillings and more than 35,000 directly employed people were left jobless.

BAHLITA urged the KRA to adhere to public finance principles that encourage fiscal predictability to make Kenyan industries competitive and curb the entry of contraband from neighboring countries.

“The proliferation of counterfeit alcohol increases the premium for tax evasion among unscrupulous players in the informal market. As a result, compliant businesses and indeed the government must devote resources to compliance enforcement to protect revenue and market share,” the VP observed.

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Rozella J. Cook