The Bar Hotels Liquor Traders Association of Kenya (BAHLITA) has urged the government not to increase the excise duty on alcoholic drinks as this will further cripple the sector that is recovering from the effects of Covid-19.
This comes ahead of the Kenya Revenue Authority (KRA)planned excise duty inflation adjustment that is expected to increase taxes on alcoholic products from October 1.
Speaking to the media, BAHLITA Secretary General Boniface Gachoka noted that increasing the tax on alcoholic products will make people opt for other cheaper alternatives which in most cases are illicit brews.
“We are completely against the plan to raise the prices of beer and other alcoholic drinks. When you increase the price of legal alcohol, what you are doing is pushing our clients to drink illicit brews such as chang’aa,” he said.
He further requested the new nominee for the Ministry of National Treasury and Planning Njuguna Ndungu to look into the matter once he settles in his office as the sector is yet to fully recover and another upward revision in the rates may even force the businesses to shut down completely altogether.
“During the Covid-19 period when our entities were shut, we lost over Sh100billion and fired 250,000 of the employees in the sector. When you want to add alcohol prices again for the third time, we have counted from our survey that we will lay off about 80,000 of our employees, where will they go? That will also lead to the closure of some 12,000 clubs, where will those business people go to?” posed Gachoka.
BAHLITA’s Secretary General noted that the Kenya Kwanza manifesto whose main focus was on uplifting small businesses will not be achieved if the taxes will be revised upwards for the third time, as this has made alcohol from neighbouring countries penetrate the market as they are quite affordable.
“As alcohol sellers, we support barley farmers and the increase in taxes will also affect them. The previous increase has led to a decline in demand which has resulted in lower sales. This will force us to reduce the number of workers that we have. This will have a trickle-down effect on the whole value chain,” added Gachoka.
He noted that the sector is still in talks with the government and will announce the next move on October 1.
KRA’s Commissioner General Githii Mburu had earlier indicated the tax rates on items such as beer, wine and cigarettes will be adjusted using the average inflation rate for the financial year 2021/2022 of six decimal three per centum (6.3 per cent).
The new rates will see taxes for every two beer bottles increase to Sh142.4 from Sh134 while excise for wines, will increase to Sh243.4 for every 208 litres up from Sh229 and Sh356.4 for 278 litres of spirit from Sh335.