CRIPPLING SECTOR

Stop over-taxing alcoholic drinks, traders tell state

KRA intends to increase excise duty by 6.3%

In Summary

• “Two years down the line, the sector is still struggling to get back on its feet,” BAHLITA chairman Simon Njoroge said.

• They said the government should instead consider slashing the hefty salaries paid to MPs, Cabinet secretaries and senior government officers.

Bar, Hotels and Liqour traders association members during a press briefing in Murang'a town on Tuesday, September 20.
CRIPPLING THE SECTOR: Bar, Hotels and Liqour traders association members during a press briefing in Murang'a town on Tuesday, September 20.
Image: ALICE WAITHERA

@Alicewangechi

Bars, hotels and liquor traders are urging the government not to increase taxes on alcoholic drinks.

They say the government risks taking the country back to illicit or second generation liquor consumption, if alcoholic drinks are further taxed.

The Kenya Revenue Authority has released a notice announcing its intention to increase excise duty by 6.3 per cent, representing the average inflation rate recorded in the 2021-2022 financial year.

Some of the products targeted for the new tax include alcoholic drinks, bottled water, cider, fruit juices, berry and other fermented drinks.

But the traders registered their opposition to the proposal saying further increase of commodities’ prices will only aggravate Kenyans’ suffering.

They said investors in the hospitality industry need time to recover from the devastating effects of the Covid-19 pandemic.

“Two years down the line, the sector is still struggling to get back on its feet,” BAHLITA chairman Simon Njoroge said.

He spoke during a press briefing on Tuesday in Murang'a town.

Njoroge said the Finance Act 2022 that was passed in July contained a 10 per cent increase in excise rates for beers and a 20 per cent increase for spirits.

He said imposing two major excise tax increments in less than three months will negatively impact their consumers’ welfare and will increase illicit trade.

The chairman said since July consumption of barley based alcohol has declined by 21 per cent while sorghum based alcohol has reduced by 32 per cent.

“Global fuel prices and the war in Ukraine has put a lot of pressure on households that are already grappling with reduced earnings,” he said.

Bar, Hotels and Liqour Traders association chairperson Simon Njoroge addressing journalists oin Murang'a on Tuesday, September 20.
REDUCED CONSUMPTION: Bar, Hotels and Liqour Traders association chairperson Simon Njoroge addressing journalists oin Murang'a on Tuesday, September 20.
Image: ALICE WAITHERA

Njoroge said the effect of sustained increment of taxation on alcoholic drinks will be the growth of illicit alcohol trade as Kenyans seek an alternative and a consequent increase in the health burden in the country.

He said the local manufacturing industry is set to lose an average of Sh4.2 billion in reduced use of raw material and a further Sh15.7 billion in employment income loss, as businesses in the sector continue to close down.

The chairman said the government should not overburden Kenyans and should consider cutting its expenditure further to raise revenue.

“Why can’t it cut the salaries of MPs, Cabinet secretaries and other senior government officials paid heftily? Why can’t it cut on their allowances instead of turning to Kenyans who are already struggling?” he said.

“Imposing these taxes will kill this sector that thousands of Kenyans rely on. It is already collapsing. Don’t kill it.” 

After Covid-19, more than 1,000 premises were unable to re-open, resulting in loss of jobs.

Njoroge said many Kenyans use alcoholic drinks to unwind from the everyday stresses and as a way of seeking comfort.

Macharia Kairu, a member of the association and Murang’a chairperson said cheaper drinks are getting more popular as high priced drinks become inaccessible to many Kenyans.

“Many are doing casual jobs and earning less than Sh500 per day. You cannot expect that person to buy a drink costing more than Sh200,” he said.

Suzanne Malei, another member, said a large number of youths continue to use drugs and smoke bhang as a cheap way of getting high.

“You cannot tell youths not to drink. They will get another means of getting their high. The government should help control this to save their lives,” she said.

(Edited by Bilha Makokha)

WATCH: The latest videos from the Star