Commerce

Brewers raise alarm as KRA struggles to stop illicit drinks

Tuesday, May 17th, 2022 06:55 | By

Kenya Revenue Authority (KRA) faces a Herculean task in its bid to rump up tax collection as a savvy network of traders impedes the efforts.

The efforts include technology and manpower deployment and cartels with the know-how to print and deploy counterfeit excise stamps in the shortest possible time.

Despite all the efforts and technology that has been put in place, these unscrupulous traders have found ways of dodging the system through inventions that keep them ahead of the game, and the revenue systems at large.

One of the industries most affected by fake stamps that continue to deny KRA and legitimate traders revenue is the liquor industry which has seen an uncontrolled flow of substandard liquor for mass consumption.

A recent meeting to deliberate on the rising cases of stamps and counterfeit in the mass market revealed the dangerous ground that the country is standing on. Stakeholders blamed KRA enforcement and surveillance officers for laxity and poor policing of the system that is easily cracked by the cartels.

According to some of the participants, the country is faced with a situation that is not only a business issue but a matter that hits directly at the society.

“We are witnessing a very dangerous situation, especially now that the whole country is grappling with the election campaigns. One comes across hundreds of intoxicated youth who imbibe liquor that is not certified, controlled and safe,” said a director of a leading manufacturer on the sidelines of the meeting.

Poor policing

“It is just poor policing and laxity by the officers charged with the mandate,” the director who requested to remain anonymous said adding that KRA needs to up the game in many parts of the country.

The taxman recently closed a company in Thika that was suspected to be the nerve centre of an illicit alcohol operation. Found at the premises were thousands of fake KRA stamps.

Officials from the tax agency confirmed to Business Hub that the high-level operations involved top officials from the Department of Criminal Investigations (DCI), Kenya Bureau of Standards (Kebs), and KRA.

Stephen Mutoro, Consumers Federation of Kenya (Cofek), Secretary general shared the concern, saying counterfeits and Illicit trade are on the increase.

“As the cost of living skyrockets, this challenge will only grow exponentially. It’s the reason we have established the Stop Crime Kenya (StoCK) campaign to counter the adverse health and economic effects in terms of suspect products and annual loss to illicit trade and counterfeits, he said.

Manufacturing purposes

However, a senior official at KRA dismissed some of the statements by the manufacturers, saying they are closely monitoring the possible proliferation of illegal drinks in the market and consumption across the country. Increased incidents of illicit trade in the country have forced KRA back to the drawing board, rolling out new generation excise stamps.

Traders and manufacturers risk fines of up to Sh5 million or three years in jail or both for using old generation stamps on bottled water, juice, soft drinks, beer, wines and spirits packages.

Another intervention announced by KRA for manufacturers to install CCTV cameras in their factories has, however, been dismissed as ambitious and unnecessary.

“How can you ask a manufacturer to install CCTV cameras while most of the businessmen in the country have massive homes that can be used for bottling and manufacturing purposes.

This is a complete mockery of human intelligence,” said another manufacturer.

“Manufacturers have go-downs stationed outside their premises for storage and can equally be used for fishy businesses. Let us get serious if this is to work out well,” added the brewer.

KRA started phasing out the stamps last month but gave traders 30 days to clear out stocks that were affixed with the old stamps.

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