Alcohol industry protests review of excise duty laws

Beer will be charged Sh3 stamp duty. [iStockphoto]

Manufacturers and distributors of alcoholic beverages have termed the government's proposal to increase the collection of sin tax through amendment of the Excise Duty Act ill-informed.

Under the aegis of the Alcoholic Beverages Association of Kenya (ABAK), they accused the government of increasing taxes "through the back door with no regard for the prevailing tough economic situation." The lobby claimed that the new tax measure is an indictment of the government's failure to curb the proliferation of counterfeits in the market.

Excise Duty, they further noted, has been increased twice in less than a year through the Finance Act, 2022 in July last year and the taxman's inflation adjustment that happened later in October of the same year.

ABAK Chairman Eric Githua said in Nairobi on Tuesday the anticipated tax increase goes against the original intention of the Excise Duty stamp, which was a means of improving revenue collection by curbing illicit trade.

"The increase in the prices of stamps is another way of increasing the money paid out to Kenya Revenue Authority (KRA) by manufacturers of excisable goods. It amounts to increasing Excise Duty via the backdoor," said Mr Githua.

If the proposal is passed, wines, including fortified wines and other alcoholic beverages obtained from the fermentation of fruits, will attract Sh5 stamp duty. Spirituous beverages of an alcoholic strength not exceeding 6.0 per cent will attract Sh3 stamp duty.

Beer, cider, perry, mead, opaque beer and mixtures of fermented beverages with non-alcoholic beverages will also be charged Sh3 stamp duty.

ABAK notes that these changes will move the excise stamp duty on wine and spirits by 79 per cent from Sh2.80 to Sh5. That for beer and cider has gone up 100 per cent from Sh1.50 to Sh3.

Mr Githua said ABAK has petitioned the National Treasury and KRA on the regulations.

The tax proposals are expected to take effect next month. These tax proposals, which are contained in the Excise Duty (Excisable Goods Management System) (Amendments) Regulations, 2023, also affect tobacco products, juices, bottled water and cosmetic products.