KENYA – Kenyan glass manufacturers have backed the 25% duty on imports introduced by the government through the Business Law (Amendment) Act, 2020 citing it is away for the government protecting the local industry.
Consol Glass and Milly Glass say local manufacturers have the capacity to meet local demand.
“This is the government protecting local industry and if you look at our investment in glass in the region it has had a slow growth because of imports that are being dumped from Egypt, the Middle East and Comesa countries,” said Consol Glass Managing Director Joe Mureithi.
He said because of the dumping there was no accountability, with bottles ending up in the hands of producers of illicit brews. “If you come to our factory, we can tell you who we sell all our bottles to.”
Mohamed Rashid, the managing director of Milly Glass in Mombasa highlighted that the tax would help local manufacturers grow.
He said the competitive edge that glass from Egypt had was due to subsidies that companies got from the government, including transport rebates.
“This (new tax) has levelled the playing ground and gives us a chance of getting back into business because we have been running at just about 40 per cent of our capacity,” said Mr Rashid.
Milly Glass upgraded its manufacturing plant at a cost of Sh600 million (US$5.5m) last year and the machines have been operating below capacity.
Rashid said the argument by those against the excise duty that local manufacturers lacked capacity was not true.
“There is no truth in people saying we have no technology. The two glass manufacturers in Kenya are operating below capacity because of the imports. Our technology is at par with that in use everywhere else in Africa,” he said.
Last week brewers joined hands with other glass bottle users to protest the 25% excise tax, saying it will be punitive since the industry relies heavily on imports.
In a memorandum presented to the Departmental Committee on Finance and National Planning, the glass users comprising the Kenya Breweries Limited (KBL), Coca-Cola beverages Africa, UDV Kenya Limited, Kenya Wines Agency Limited (KWAL) and Trufoods Limited have asked that the excise duty be removed for being counterproductive.
The manufacturers want the First Schedule to the Excise Duty Act amended by deleting the proposed 25% excise duty on imported glass “because local glass making companies do not have the capacity to serve increased orders”.
“They lack modern glass technology, which prevents them from switching from one type of glass to the next efficiently and the protection of glass manufacturing companies in Kenya violates the principle of equity and fairness in the taxation of excisable goods.”
“It will increase the cost of alcoholic products and soft drinks beverages in a season when household disposable income is facing the greatest negative impact due to the Covid-19 pandemic,” the manufacturers wrote.
The Kenya Revenue Authority (KRA) is said to have pushed for the amendments to boost its war on an alcohol cartel evading tax through unaccustomed liquor apart from boosting the sourcing of the bottles from within the country.