Beer makers reel under high taxes
What you need to know:
- “Zero rating low-end alcoholic drinks is long overdue because the high taxes have only served to push the prices up,” Africa Spirits Limited executive director Peter Njenga told the Nation.
- The recently established Responsible Alcohol Drinks Companies Association has also complained that the existing taxation system is discriminatory and a hindrance to local entrepreneurship.
- Senator Keg was enjoying a tax-exempt status until last year when the National Treasury imposed a 50 per cent tax, resulting in an increase in retail price and a sharp drop in sales.
Alcohol producers are pushing on with a demand to waive taxes on products targeted at the low-end market, saying, such a move will boost the fight against illicit brews.
Manufacturers say heavy taxes imposed on their products have priced them beyond the financial ability of the target group, thus creating room for the infiltration of cheap counterfeit brews in the country.
“Zero rating low-end alcoholic drinks is long overdue because the high taxes have only served to push the prices up,” Africa Spirits Limited executive director Peter Njenga told the Nation.
The company is the manufacturer of the flagship vodka brand Blue Moon, which is targeted at the lower middle class as well as Furaha and Legend spirits.
Mr Njega said that by zero-rating these products and increasing consumption of the same, the industry will grow and create employment, thus earning the exchequer income tax.
VICIOUSLY LOBBYING
The recently established Responsible Alcohol Drinks Companies Association has also complained that the existing taxation system is discriminatory and a hindrance to local entrepreneurship.
The country’s major alcohol markers have also been viciously lobbying for either duty waiver or lenient taxation on their products in an attempt to have them retail at affordable prices.
Kenya Breweries Limited has had its attempt to reinstate duty remission on its flagship low end market beer, Senator Keg, declined by Parliament.
The vice-chairman of Parliamentary Finance, Trade and Planning committee, Mr Nelson Gaichuhie, said that the move would have ended up benefiting Kenya Breweries at the expense of other brewers.
Senator Keg was enjoying a tax-exempt status until last year when the National Treasury imposed a 50 per cent tax, resulting in an increase in retail price and a sharp drop in sales.
The rise has so far seen the brewer scale down on production of the drink owing to poor demand.
The bear-maker has since ended sorghum growing deals with about 20,000 farmers.
Its rival, Keroche Industries, on the other hand, has petitioned Parliament to develop a sustainable taxation regime as opposed to zero-rating duty on alcoholic drinks tailored for the low-end market.
Keroche said attempts by alcohol makers to target the low-end market with cheap products has been reversed by high taxes that price the products way above the target market.
