Higher taxes on alcohol bad for business, consumers – Murang'a bar owners – The Star, Kenya

• The government has proposed an increase in excise duty on beer, spirits and glass bottles
• The traders said the sector is still reeling from the effects of the Covid-19 pandemic and that imposing more taxes will lead to further loss of jobs.
Murang’a bar owners have urged the government not to impose more taxes on alcoholic drinks.
They said they are already overtaxed and the sector is still struggling with the effects of the Covid-19 pandemic.
They said imposing more taxes may sharply increase the cost of alcoholic drinks and push more people into counterfeit and second generation alcohol.
The government is set to table the Finance Bill, 2022, in the National Assembly that proposes to have the excise tax on beer by up to 10 per cent, spirits by up to 20 per cent and a new tax on glass bottles of 25 per cent.
Murang’a Bar Owners Association chairperson Simon Njoroge said the proposed tax on liquor packaging materials may not only increase the cost of alcoholic products but also encourage the use of plastic packaging.
Njoroge said this would worsen the fight against climate change.
The government has also proposed an increase in excise duty on adverts by 15 per cent that Njoroge said will limit traders from creating awareness and hinder protection of consumers from illicit drinks.
“The high prices of alcohol will encourage the growth of illicit trade in the form of contraband and cheap raw spirits’ entry into the country from the neighbouring countries,” he said.
Njoroge said the number of outlets have been reduced from 54,000 to about 32,000 countrywide due to the pandemic, leading to the loss of 110,000 jobs.
This represents a loss of Sh19.8 billion in household income in the hospitality industry.
The sector is experiencing a heightened cost of doing business due to increased fuel prices and surging cost of living.
“Our customers have made complaints regarding increased food prices arising from increased prices of cooking oil, cooking gas, electricity, water and even labour,” Njoroge said.
He explained the sector has made a minimal recovery after the High Court suspended the imposition of excise duty on alcohol, fruit juices and cigarettes in November last year.
This followed a petition by lawyer Mwaura Kabata, who wanted the court to declare Kenya Revenue Authority’s move to impose the tax unconstitutional.
Njoroge said the sector is still recovering and pleaded with the government to consider doing away with the new taxes.
He said the government imposed similar taxes on sorghum-based beer in 2015 that disrupted the value chain and resulted in the loss of jobs and lives.
“The consumption of illicit beer increased so much that the President had to intervene through the establishment of a multi-agency task force that led a nationwide crackdown.”
“Last year, Interior Cabinet Secretary Fred Matiang’i established another task force to tame illicit alcohol in the country,” he said.
Consumption of illicit liquor, he said, has a detrimental effect on consumers’ health and directly affects the lives of children and women who need protection from the government.
This is because it turns consumers into zombies who become dependent on it and unproductive economically, leaving women and children to fend for themselves.
Njoroge said if the government’s intention is to increase its revenue, it should focus on controlling the illicit alcohol that constitutes 44 per cent of the liquor market, a move he said could earn more than Sh85 billion annually.
Beer is the primary consumer of barley that is grown in Meru, Narok, Nakuru and Uasin Gishu counties and sorghum that is grown in 21 counties.
“With a decline in beer volumes, barley and sorghum farmers will be forced to cut down production. We urge members of the outgoing National Assembly to heed our requests.”
“The national representative body of bars, hotels and liquor traders have opened our doors to stakeholders for further discussions to seek an amicable solution,” Njoroge said.
Edited by A.N
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