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Dealers term annual alcohol tax increase punitive

Barry Silah @obel_barry

Kenya’s leading alcoholic beverages manufacturers and distributors under the Alcohol Beverages Association of Kenya (ABAK) umbrella have expressed disapproval over the proposal to amend the Excise Duty Act to provide for annual excise increase on alcohol beverages pegged on inflation.

The national assembly had noted that random increase in excise duty leads to constant price increases of alcohol beverages, which in turn had given the illicit market an opportunity to blossom.

“We had started making gains against the excessive, volatile, unpredictable and indiscriminate excise regime in Kenya which is a catalyst for illegal trade.

Parliament ought to have enacted legislation that commits at least two per cent of the Sh140 billion excise contribution by alcohol industry to nab counterfeits and illicit brews,” said ABAK chairman Gordon Mutugi.

The association pointed out that there was need for Government to stop inflationary increase this year and provide more funding to fight the proscribed trade in alcohol and enhance controls to ensure a level playing field for both imports and locally-manufactured goods.

Mutugi said that a recent campaign between ABAK, Kenya Revenue Authority and other Government agencies led to massive destruction of illicit trade and set an otherwise chaotic industry into a path of sanity and order adding that it is sad that this amendment will roll back gains that industry had started making towards fighting the 40 per cent illicit alcohol market which robs the exchequer in excess of Sh40 billion annually.

“A fair tax regime should protect consumers, enhance tax compliance, increase tax collection for the government and support business and job creation. Unfortunately, this cannot be said about annual excise increases as proposed in the Finance Bill 2018,” says Mutugi.

A new research commissioned by ABAK says that for a tax system to be successful, it should employ an applicable tax rate that replicates the purchasing power in the country across the socio-economic spectrum.

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