Bar owners warn tax on keg to cut over 200,000 jobs

Bar owners have asked the Treasury to drop the proposed excise tax on Senator Keg saying it will hurt sales and cut more than 200,000 jobs.

Bars, Hotels and Liquor Traders Association secretary-general Boniface Gachoka said the Treasury should review the decision as it would also lead to a resurgence of illicit brews.

The Treasury has proposed to slash excise duty remission on beer made from sorghum, millet or cassava from 80 percent to 60 percent.

“A change to remission of 60 percent may be proposed and discussed after the pandemic lapses but for now, such a huge change would gravely harm the industry, negatively impact the economy and lead to the resurgence of consumption of illicit brews,” said Mr Gachoka in a statement yesterday.

The lobby said cutting the remission rate would raise the production cost, resulting in a significant keg price increase. Low-income earners mostly consume the alcoholic beverage.

The tax move, the lobby said, has echoes of 2013, when the Treasury cut the remission from 100 percent to 50 percent, “which resulted in a resurgence of illicit alcohol, with the consumption so high that the State ordered a crackdown on it in 2015”.

“When the remission was increased again in September 2015, fatalities arising from the consumption of illicit brew declined. It is, therefore, predictable that the linked increase in price arising from a reduction in excise duty remission will result in the resurgence of illicit brews,” said Mr Gachoka.

Council of Governors Agriculture Committee expressed similar concerns.

Committee chair Muthomi Njuki, who is also Tharaka-Nithi governor, said the changes would have adverse effects on farmers who cultivate sorghum and millet as cash crops.

The committee, he said, has written to Treasury Cabinet secretary protesting the proposed excise tax, which will raise the production costs and fuel illicit brews use.

“Many farmers across several counties, especially those in arid areas have been contracted by local beer manufacturers to grow these crops making it their main source of revenue and if the proposed changes are adopted, they will be rendered jobless,” said Mr Njuki.