Commerce

MPs urged to focus on illicit brew not tax hikes

Wednesday, May 18th, 2022 00:57 | By
Members of Parliament during a past session. PHOTO/File

Beer distributors want the government and Parliament to consider tackling illicit brew trade and seal tax revenue leaks instead of choking legitimate businesses with higher taxes.

The stakeholders argue that illicit trade is the biggest threat in the supply chain, and additional taxes spell doom, and will instead lead to job losses.

“It should not be business as usual. As Parliament considers the Finance Bill before the House adjourns, they must look into this issue,” they said at a press conference in Nairobi yesterday.

They also warned that the move may push a huge chunk of youths to consume dangerous and sub-standard alcohol substitutes.

“That is where the government should focus on to maximise tax revenue and stop passing oppressive taxes that continue to kill legitimate enterprises we represent,” said Maina Gikonyo, managing director Rwathia Distributors.

The proposal is contained in the Finance Bill 2022 which seeks to increase Excise Duty on beer by 10 per cent, on spirits by 20 per cent and on locally manufactured glass by 25 per cent.  This will see the cost of beer surge by Sh12.15 per litre to Sh134, wine by Sh20.80 to Sh229, while spirits will attract Sh47.60 additional tax to Sh335.30 per litre.

They estimate that close to 490 million litres of illicit alcohol is sold annually, translating into a loss of Sh85 billion in taxes, which if sealed, the legitimate sector will thrive and contribute significantly to the exchequer.

“We need the government to decide if their intention is to increase the cost of indulging in what they refer to as ‘sin’ or maximise tax revenue collection,” Gikonyo added.

This is in addition to a 15 per cent excise duty on fees charged on advertisements by television stations, print media, billboards and FM radio stations on alcoholic beverages, betting, gaming, lottery and prize competitions.

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