Consumers to spend more on beer as Treasury tables tax review

KENYA – The National Treasury of Kenya has proposed to review regulations that offer huge tax breaks to brewers using sorghum, millet and cassava in making the Keg beer from 80 per cent to 60 per cent.

The Excise Duty (Remission of Excise Duty) (Amendment) Regulations, 2017, allows the manufacturers of Keg that is largely consumed by low income earners, to make an application to the Cabinet secretary Treasury to grant remission of excise duty at 80 per cent.

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Treasury CS Ukur Yatani has, however, proposed to review this remission downward to 60 per cent in the draft Excise Duty (Remission of Excise Duty) (Amendment) Regulations, 2020, reports Standard Media.

The move will see an increase in price of a 300 millilitre serving of keg beer by Sh10, meaning the retail prices will go up to about Sh38 per 300ml from the current Sh28.

In regards to this move, the East African Breweries Limited (EABL) has stated the price increase might result in resurgence in consumption of illegal brews.

Additionally, the brewer said the proposed tax measures would make worse an already bad situation, with the keg segment of the alcoholic business having been hit by measures put in place to contain the spread of the coronavirus pandemic and not having take away options.

Upon the closure of bars as directed by the government in bid to curb the spread of the virus, EABL has closed down its subsidiary’s plant in Kisumu since March 23, 2020 leading to the collapse of the Keg value chain which it has made immense investments on.

The firm said operations at the Ksh.14 billion Kisumu plant might become untenable leading to the closure of the plant.

In other related news, as South Africa graduated to level 3 lock down, retailers have seen a surge in alcohol demand coupled with long queues of shoppers ready to fill their carts with cases of beer and cider and bottles of whiskey and wine.

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Under looser restrictions, alcohol will be sold for home consumption from Mondays to Thursdays between 09:00a.m and 16:00p.m.

Online alcohol stores and delivery apps have been dealing with high volumes of orders after President Cyril Ramaphosa’s announcement to further reopen the economy.

Retailers like Pick n Pay and Shoprite’s Checkers supermarket chain, had allowed customers to place pre-orders online for delivery. To ensure responsible consumption of alcohol some retailers have placed limits on purchases

According to the WHO’s data, South Africa’s drinking population consumers 28.9 litres of pure alcohol – per capita – a year, the fifth highest consumption rate in the world, below Namibia (31.3 litres), Eswatini (32.7 litres), Cook Islands (32.9 litres) and Tunisia (33.4 litres).

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