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Keg beer tax: Bar owners warn 200,000 jobs on the line

Monday June 15 2020
KEG

A bar operator transports Senator Keg barrels on a motorbike in Kisumu on January 22, 2017. PHOTO | TONNY OMONDI | NATION MEDIA GROUP

By BONIFACE OTIENO

Bar owners wants the State to drop the proposed exercise tax on Senator Keg saying it will cause a plunge in sales resulting in loss of about 200,000 jobs in the country.

Bars, Hotels and Liquor Traders Association secretary-general Boniface Gachoka said the National Treasury should also rescind the decision as it will also lead into a resurgence of illicit brews.

The National Treasury has proposed to adjust relief on excise duty by 20 per cent.

“A change to remission of 60 percent may be proposed and discussed after the pandemic lapses, but for now, such a huge change would gravely harm the industry, negatively impact the economy and lead to the resurgence of consumption of illicit brews,” said Mr Gachoka in a statement Monday.

EXCISE DUTY

In a notice posted two week ago, Treasury Cabinet Secretary Ukur Yatani called for opinions on the proposal to slash excise duty remission on beer made from sorghum, millet or cassava from 80 percent to 60 percent.

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Mr Yatani published the notice for the public to submit their views before the amendment to the excise duty regulations is taken to the National Assembly for approval.

Reducing the remission means higher production cost and a significant rise in the price of keg, mainly consumed by low-income earners.

In 2013 the National Treasury reduced the remission from 100 percent to 50 percent, resulting in a resurgence of illicit alcohol, with the consumption so high that the State ordered a crackdown in 2015.

“When the remission was increased again in September 2015, fatalities arising from consumption of illicit brew declined. It is therefore predictable that the linked increase in price arising from reduction in excise duty remission will result in the resurgence of illicit brews,” said Mr Gachoka.

LOW INCOME EARNERS

The association’s chairman Simon Mwangi said that contrary to the perception by the Treasury demand for Senator Keg is not like that of other classes of alcohol.

He said that because the brand targets low income earners, an increase in price would mean that it becomes unaffordable, and drinkers would have to turn to cheaper and unsafe liquors.

Mr Mwangi said the government should set up a taskforce comprising members of various organisations across the sector to deliberate on plans to revive the economy.

“The association has 54,000 bar owners and hoteliers and thus should be included in any progressive meeting as we are the voice of the people,” he said.

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