DAMAGING BLOW

330,000 jobs at risk if proposed tax on low-priced beer is effected - Keg sellers

Treasury’s proposes an increase in tax on beer made from sorghum, cassava or millet.

In Summary

• The distributors, and the Pubs and Restaurants Association of Kenya (PERAK) said the proposal would deal a damaging blow to efforts to reduce the number of drinkers taking illicit alcohol.

• The proposed amendment to the Excise Duty (Remission of Excise Duty) Regulations, 2017, is set to be tabled in Parliament once public participation is complete.

Keg Distributors representatives.
Keg Distributors representatives.
Image: COURTESY

Over 300,000 are at risk if the proposed tax on low-priced beer is effected, Keg sellers now say.

The Treasury’s proposal was to increase the tax on beer made from sorghum, cassava or millet.

However, Senator Keg distributors now claim this will result in at least 330,000 job losses as demand drops due to a price hike of the affordable beer.

The distributors and the Pubs and Restaurants Association of Kenya (PERAK) said on Friday that the proposal by the Treasury would deal a damaging blow to efforts to reduce the number of drinkers taking illicit alcohol.

 
 
 
 

Speaking at a press conference in Nairobi, they said the proposal made public last week was also ill-timed, as the industry is already reeling from the effects of the economic slowdown caused by the Covid-19 pandemic.

“The proposal by your office will lead to an increase in the retail price of Keg beer at a time when we have observed a massive increase in illicit brew consumption due to closure of bars and a severely depressed economy affecting the daily wage economy,” they said.

Thuku Kariuki, the spokesman for the Keg distributors, said the ripple effect of the tax would be devastating to their trade.

He said this would result in increased unemployment, illicit brew consumption, and loss of revenue for distributors and retailers, who employ approximately 130,000 people directly and 200,000 people indirectly.

The proposed amendment to the Excise Duty (Remission of Excise Duty) Regulations, 2017, is set to be tabled in Parliament once public participation is complete.

The alcohol beverage industry has been among the hardest hit by the coronavirus pandemic and with bars closed there have been limited in their sales.

“We are currently losing close to Sh100 million daily in sales revenue and we are struggling to meet our fixed costs, including the payment of workers. Our customers across Kenya have already asked for assistance and trade financing once bars reopen. However, most of them are not sure if they will ever come back to business,” Kariuki said.

Patrick Muya, the patron of the Pubs, Entertainment and Restaurants Association of Kenya, said the move would amount to double jeopardy for a sector already in dire straits.

 
 
 
 

“While we support the Government’s measures during these unprecedented times, we submit that the industry needs all the support it can get, and not proposals that are likely to cause more pain and suffering than good,” he said.

The distributors said the increase in tax would reverse the gains made in fighting the consumption of illicit alcohol, which was the intention when the government agreed to introduce the remission for beer made from indigenous ingredients.