Beer distributors seek reprieve on planned tax hike

Beer distributors have asked the Kenya Revenue Authority (KRA) alongside the National Treasury to reconsider the planned hike of excise duty rates.

In a statement issued on Friday, the alcoholic beverage dealers said the planned raise in tax would dampen the outlook of the sector which is at present seeking to recover from disruptions occasioned by the COVID-19 pandemic.

“We are looking forward to a resumption of business soon, if the government is of the view that the infection rates have declined well enough, but we are concerned that the sector will face difficulties getting back on its feet if the increased taxes kick in at the same time,” said Maina Gikonyo, an alcohol distributor.

While the planned increase of the excise rate has been a routine exercise since implementation in 2018, the distributors argue the move under the current operating environment would sit against the government agenda of cushioning business operators.

Esther Muthoni, a beer distributor, says the business has been hanging on to life by the thread with their operations having severely thinned following the closure of bars and entertainment joints at the end of March.

“Already, 30 per cent – that’s about 13,500 outlets – of the bars that were operating before COVID-19 will not be reopening as they constitute the businesses that have collapsed due to the general effect on businesses brought on by the pandemic and the measures to limit its spread,” she said.

Alcoholic beverages are among 31 excisable goods whose price is set to increase from October 1 as the tax man adjusts the rate of tax charged aligning it to changes to the cost of living across the last 12-months.

The beer distributors’ plea follows a petition by the Kenya Association of Manufacturers (KAM) to freeze the implementation of the tax sighting similar lamentations.

KRA has further been criticized for jumping the gun in pursuing the changes which are set to be approved first by the National Assembly following amendments done via the 2020 Finance Act.

The adjusted excise rates are expected to affect the price of other commodities including fuel, cigarettes, bottled water, fruit juices and makeup/cosmetics.