East African Breweries Limited (EABL) is set to increase the prices of its alcoholic products including beers and spirits if the Treasury implements a proposal to raise excise taxes on the products.
EABL managing director Jane Karuku says a tax increase will be a shock to the business, given that the sector is still reeling from the economic aftershocks of the Covid 19 pandemic.
“I think the tax changes will be a disaster. Ten percent is too much. It will make beer and spirits very expensive. It will affect the whole ecosystem from farmers, bar owners and distributors. It will not be good for anybody,” Jane Karuku EABL managing director as quoted by business daily.
Jane Karuku declined to specify the planned increase but said the brewer will have no choice but to pass on the additional burden of tax to consumers if the tax proposals are adopted.
In the Finance Bill 2022, Treasury Cabinet Secretary Ukur Yatani has proposed to raise the consumption tax on beer by kes 12.15 per litre to kes 134, wine by kes 20.80 to kes 229, while spirits like whisky, gin, rum and vodka will attract kes 47.60 additional tax to kes 335.30 per litre.
Treasury Cabinet Secretary Ukur Yatani has proposed to heavily beer products by raising the excise duty.
If the Treasury proposals become law, a litre of beer will attract an excise duty of kes 134 from the current kes 121.8. Consequently, the same quantity of spirits such as whiskey, gin and rum will be slapped with a higher sin tax of kes 335.30 up from kes 287.7 while Wine will attract kes 229 compared to the current rate of kes 208.2.
Mr Yatani said the higher excise, which is separate from the annual adjustment for inflation, is among new tax measures meant to help the government generate an additional kes 50.4 billion in the 2022/2023 fiscal year.