Nairobi,
Wednesday, June 5, 2024
KNA by Zainap Mong’are/Blessing Mutheu
The Alcoholic Beverages Association of Kenya (ABAK) have called for a review of the proposed amendments to the finance bill 2024 saying that increased taxes on alcoholic beverages will drive them out of business.
The association opined that the proposed changes will support the consumption of illicit alcohol given the intended increase in prices of safe alcohol.
ABAK said the net effect of some provisions in this year’s revenue raising law is likely to drive alcohol manufacturers out of the country.
Speaking in Nairobi Tuesday, ABAK Chairman Eric Githua said that if the finance bill is passed in its current form, it will have detrimental effects on their operations given that the Kenya tax regime is yet to be streamlined.
“The proposal to amend the excise duty act by appealing section 14, will subject local manufacturers to double taxation of the product at input stage and at the finished goods stage whereas imported products will only be charged excise tax on the finished goods,” the chairman said.
He added that the removal of the relief is likely to increase the cost of locally produced goods making them less competitive which will turn Kenya into a net importer of accessible products becoming uncompetitive within the East African Community (EAC) region.
Githua explained that significant manufacturers already exist within the EAC and thus the increased tax will encourage cross border illicit trade as products will be cheaper in the neighbouring regions.
“The deletion of section 14 and a 70 percent increase in spirits tax as proposed in the finance bill 2024 will lead to a collapse of the local spirits production due to a 252 percent increase in cost of production and 166 percent increase in the recommended retail price which will negatively affect employment within the locally produced spirit value chain,” Githua noted.
The Chairman stated that ABAK opposes the deletion of the words twenty-four hours and substituting it with the words five working days adding that, they strongly believe that the extension to a five-day payment timeline, imposes a significant operational cash flow strain on businesses impeding their ability to invest in growth opportunities.
He raised concern on the excise tax on spirit stipulating that all spirits of alcoholic strength exceeding six percent will attract a new excise duty rate of 16 per cent per liter, such that the cost of the cheapest spirit will move from Sh290 to Sh770 in which most consumers cannot afford.
“If this proposal is passed as it is it will prompt shifts and impact affordability with a risk of growth of illicit alcohol,” he stated.
East African Breweries Limited (EABL) Corporate Relations Director Eric Kiniti stated that the county Government have been implementing laws passed by the county assemblies containing restrictions that are unfair to businesses and inconsiderate of the investments by entrepreneurs which include ; banning electronic advertisement of alcohol, limiting transportation of alcohol at night, limiting advertising using branded vehicles and mandatory branding of vehicles which makes it difficult to continue that business.
While ABAK supports the fight against illicit alcohol and underage drinking, the director urged for restraint by the government to be more coordinated and inclusive of the ideas that they as an industry have given.
Courtesy; KNA
