Alcohol traders seek pause on duty hike, estimate Ksh.16 billion losses

Traders involved in the sale of alcoholic beverages have asked the Kenya Revenue Authority (KRA) to pause its planned adjustment of excise duty for inflation.

The traders, who include the Alcohol Beverages Association of Kenya (ABAK) and the Pubs, Entertainment & Restaurants Association of Kenya (PERAK), have sighted the high cost of living in their push.

"We recommend that no inflation adjustment is done this year given the high cost of living, high cost of fuel, rising levels of illicit alcohol and sub-judice concerns regarding adherence to High Court orders from the last excise tax inflation adjustment," the traders said in joint submissions to KRA Commissioner General Githii Mburu.

KRA has proposed lifting specific rates of excise duty by 6.3 per cent, representing the average rate of inflation in the concluded 2021-2022 fiscal year.

Other products targeted in the excise duty adjustments include bottled water, juices, cosmetics and cigarettes.

Alcohol traders estimate losses from the adjustment of excise duty rates at Ksh.15.7 billion.

The estimated losses cover income losses from direct jobs, distribution jobs, trade-on trade and off-trade.

KRA is expected to close the window for submissions on the proposal on Friday ahead of the planned adjustments to the rates of excise duty on October 1.

Last year, the tax man was sued over the planned excise duty rate hikes which occur at the end of every fiscal year.

The court cases including one challenging the adjustment on excise duty levied on fuel remain outstanding presently.

From January 1, 2023, KRA will be a liberty to pause adjustment on the rate of excise duty on specific products having considered the prevailing operating environment.

This following changes introduced through the 2022 Finance Act.