NAIROBI, Kenya, Nov 8 – Kenya Breweries Limited (KBL) is urging the state to lower excise taxes on alcoholic products to tame illicit brews in the country.
High taxes have made genuine alcohol expensive, pushing ordinary Kenyans to buy cheap, substandard liquor.
“A recent industry report from Euromonitor indicates that nearly two-thirds of alcohol being consumed in Kenya is illicit, meaning that far more people are resorting to the bad stuff that not only endangers their life but also denies the Exchequer due revenues,” KBL Managing Director Mark Ocitti said.
“Spirits have faced double-digit annual excise tax increases since 2015, deepening an affordability problem that has now been worsened by runaway input costs such as ethanol up 61 percent during our last financial year, among others,” he added.
Ocitti observed that the 20.7 percent decline in the Kenya Revenue Authority’s (KRA’s) excise tax collection from spirits points to a shift in spending patterns as consumers downgrade to illicit alcohol, endangering their lives and denying the government due revenues.
According to the study carried out by KBL, illicit alcohol constitutes the largest portion of alcohol consumption, amounting to more than half in the country.
Ocitti further decried the new legal requirement that prompts all breweries to make excise payments within 24 hours, compounding its players’ cash flow positions at a time when inflation is hitting the manufacturing industry hardest.
“It is a nuisance and cumbersome. It is a burden on our cash flow and a burden on our overheads because we have had to create a whole new back office,” Ocitti said.
“We are lucky because we are a big organization and we can handle it and my worry is for a smaller business that would not have that capacity.”
Excise duty returns were previously done monthly, with the new directive introduced at the tail end of the Finance Act in a bid to tackle illicit alcohol consumption.
