KBL Urges Govt to Review Excise Taxes to Combat Illicit Alcohol

Kenya Breweries Limited (KBL) is urging the government to lower excise taxes on alcoholic products in order to reduce the country’s illicit brews.

High taxes have made genuine alcohol prohibitively expensive, forcing ordinary Kenyans to purchase cheap, substandard liquor.

“A recent industry report from Euromonitor indicates that nearly two-thirds of alcohol being consumed in Kenya is illicit, meaning that far more people are resorting to the bad stuff that not only endangers their life but also denies the Exchequer due revenues,” KBL Managing Director Mark Ocitti said.

“Spirits have faced double-digit annual excise tax increases since 2015, deepening an affordability problem that has now been worsened by runaway input costs such as ethanol up 61 percent during our last financial year, among others,” he added.

Ocitti observed that the Kenya Revenue Authority’s (KRA) 20.7 percent decline in excise tax collection from spirits points to a shift in spending patterns as consumers downgrade to illicit alcohol, endangering their lives and denying the government due revenues.

According to the KBL study, illicit alcohol accounts for the majority of alcohol consumption, accounting for more than half of total consumption in the country.

Ocitti also criticized a new legal requirement that requires all breweries to make excise payments within 24 hours, further complicating its players’ cash flow positions at a time when inflation is wreaking havoc on the manufacturing industry.

“It is a nuisance and cumbersome. It is a burden on our cash flow and a burden on our overheads because we have had to create a whole new back office,” Ocitti said.

“We are lucky because we are a big organization and we can handle it and my worry is for a smaller business that would not have that capacity.”

Excise duty returns were previously done monthly, but a new directive was introduced at the end of the Finance Act to combat illicit alcohol consumption.