The world of illicit alcohol is not new in Kenya. It has been around for decades. The government of Kenya has been putting up a fight to eliminate both alcoholism and illicit brews. The efforts should be hailed. Ironically, the more the fight, the more we seem to go back several steps as a country.
Kenya is losing an average of 71 billion shillings in taxes annually due to the sale of illicit alcohol. Euromonitor Consulting says that the volume of illicit alcohol sales has recorded strong growth in value around the country since 2020 to stand at 67 billion shillings. At the same time, International Alliance for Responsible Drinking (IARD) says that up to 60 percent of alcohol in Kenya is illicit and dangerous, more than double previous estimates by the World Health Organization (WHO).
The truth is when illicit alcohol sneaks its way into the scene, it’s a party crasher of epic proportions. Legitimate manufacturers, distributors, and retailers lose out big time as these back-alley bootleggers offer their untaxed tipples at bargain-basement prices. The government’s revenue takes a massive hit, and the funds that could have built schools, hospitals, and infrastructure evaporate like morning dew in the blazing sun.
As the government loses revenue, it tightens its belt, cutting back on essential services like healthcare and education. With fewer resources available to tackle public health issues, it becomes even harder to address the repercussions of the very same illicit alcohol that sparked the whole mess in the first place.
But is the government making it to win the war on illicit brew? No. The draconian Finance Bill 2024 makes this even worse. If the Finance Bill 2024 is passed into law in its current naked form, a 750 ml bottle of 37 percent alcohol by volume of a popular beverage gin in Kenya will have an excise tax of 444 shillings, up from 267 shillings.
A 500ml Tusker Cider that used to have a tax burden of 72 shillings will now have one of 51 shillings. In a nutshell, this is the impact of the excise changes in the Finance Bill 2024; making higher-alcohol beverages more expensive. This will push Kenyans to cheaper alternatives.
Kenya’s alcoholic beverages industry has long been a cornerstone of government revenue, consistently contributing a substantial portion of excise taxes. From 2018 to 2023, alcohol accounted for 42 percent to 31 percent of total excise duty.
The data reveals a discernible pattern: nominal excise tax revenue from alcohol has exhibited an upward trajectory from 2018 onwards, except for the 2020 -Covid period. In 2023, excise tax revenues from alcoholic beverages amounted to Ksh 51.01 billion, underscoring its significant fiscal impact.
The provisions in the Finance Bill 2024 are bad for business as well as health.
Read Also: Hail For the Fight Against Illicit Alcohol, But Careful Not To Harm Genuine Businesses