Kenya Insights

Tag: Cheap liquor

  • State Mulls Plan To Return Cheap Beer

    State Mulls Plan To Return Cheap Beer

    The government is working on a model of reintroducing low-priced but healthy and affordable alcoholic drinks as one of the ways of eradicating illicit brew on the market.

    Deputy President Rigathi Gachagua said that under the model, the government will also address taxation, which impedes the production of cheaper but healthy brands.

    Mr Gachagua spoke on Monday in light of the ongoing government crackdown on illicit liquor manufacturers and sellers. He said talks are ongoing with a leading alcoholic beverages manufacturer over production of the low-priced beverage.

    “We have asked the manufacturer to start a cheap, healthy and affordable alcoholic drink. We will address the taxation issue. The main problem is the portable spirits, whose alcohol level is extremely high and toxic- which have ruined families. As a government we have a responsibility to eradicate the illicit brews,” said the DP.

    Speaking in an interview at vernacular stations Kameme TV and Kameme FM on Monday, Mr Gachagua explained that the ongoing fight is targeting manufacturers and sellers of the illicit and illegal brews.

    The Deputy President highlighted the government’s achievements and the ongoing efforts to turn around the economy.

    “Legit businesses will not be affected by the crackdown. Bar owners must unite and work with the government to eradicate the rogue traders and manufacturers producing the killer drinks. Instead of rushing to court to fight the crackdown, the bar owners should establish an organization to eradicate the rogue traders amongst them,” he said.

    He added: “Bar owners must stop claiming that the government is fighting their businesses. They should assist the government in eradicating illicit drinks as they have also destroyed their businesses. We are not fighting legitimate businesses because the Ruto Administration supports genuine enterprises,” he stated.

    He said the Government will not allow unscrupulous traders to kill people.

    “Greed and overnight chase for accumulation of wealth led us into this menace. Let us be reasonable and responsible towards wealth creation. We will do whatever we can to win the war. The illicit brews have ruined families and killed young people,” he said.

    He also urged governors to open rehabilitation wards in Level Four hospitals to treat addicts of alcoholism.

    On the political situation in the country, the Deputy President said he supports the report of the National Dialogue Committee (NADCO) report and its recommendations.

    “The report is good. Initially, I had discomfort with it but after being convinced by President William Ruto I support it. The recommendations such as reconstitution of the electoral commission, return of the official leader of the opposition and entrenching the position of Prime Cabinet Secretary in the Constitution are good for the country,” he said.

    On the principle of ‘one man, one vote, and one shilling’, the Deputy President said the issue will be addressed even if it is not in the NADCO report.

    “The ‘one man, one vote, and one shilling’ formula of sharing resources will be addressed even if it is not in the NADCO report. The formula is for fair distribution of resources based on numerical strength. In the national government we have good representation,” he said.

    Regarding the forthcoming delimitation of boundaries, Mr Gachagua assured Mt Kenya residents that no constituency will be scrapped overpopulation quota. Instead, he said Mt Kenya deserves additional constituencies.

    He cited areas like Kiharu and Kieni deserve sub-division because they are vast while others like Ruiru and Thika deserve sub-division because they are highly populated.

    On the agriculture sector, the Deputy President said the reforms in the coffee, tea, macadamia and avocado sub-sectors were bearing fruit.

    Farmers’ earnings have increased since the Ruto Administration came to power, he said.

    “Coffee farmers through their cooperatives can now access direct sales,” said the Deputy President.

    He added that the government is also turning focus on the revival of the pyrethrum subsector.

  • KRA And CAK Scuffle Over Pricing Of Cheap Liquor

    KRA And CAK Scuffle Over Pricing Of Cheap Liquor

    Competition Authority Of Kenya has rubbished off KRA orders prohibiting local distillers to sell alcoholic spirits in 250-millilitre containers below Sh150.

    According to KRA, the retailers selling spirits at or below Sh150 are tax cheats and illicit brewers who flood the market with deadly drinks. KRA stated that production expenses and duty cost don’t permit alcohol to be sold at that price. A statement that has forced CAK to seek constitutional clarity over the KRA order, pointing out that KRA could have breached sections of the antitrust law.

    “We are aware of it (price-setting order) and we have written to KRA to set up a meeting so as to appreciate where they are coming from,” CAK Director-General Wangómbe Kariuki told the Business Daily in an interview.

    KRA orders also warned distillers who sell products below Sh150 that their products would be impounded or/and withdraw their operating licenses. This whacks a large generation of consumers of upsurging cheaper spirits like Moonwalker, Jambo Extra, Dallas, meakins just to name but a few…

    “Based on our review, products in the market with a selling price below Sh150 per bottle of 250ml at 40 per cent v/v are considered non-compliant in tax based on the minimum cost structure. We request companies to adjust the prices in the current and subsequent tax returns to reflect the correct price benchmark for the alcoholic beverage sector for tax purposes.” KRA says in a letter addressed to distillers.

    In the letter, KRA issued a seven-day notice for compliance with the minimum price order.

    “KRA intends to commence mop-up of all products sold below the benchmark prices and sanctions imposed on the affected excise manufactures. The mop-up will start after seven days from the date of this letter,” added KRA in reference to the order sent in late October.

    Kenya has the highest rates of tax on alcohol as compared to other African States. Here, Spirits are taxed at Sh221.24 per litre or Sh55.31 for the 250-millilitre product.

    Tusker lager has a recommended retail price of Sh180 per bottle and Sh55.31 goes to the taxman directly as excise duty. Tax on beer has increased from Sh32.50 per bottle in 2014.

    Beer and Spirit heads in Kenya have been thrown once again under the bus. High taxes have pushed almost bankrupt Kenyans to cheap alcohol majority who are illicit drinks.

    KRA Commissioner for Domestic Taxes Elizabeth Meyo said the move to set the minimum price would boost tax revenues and help the taxman to clamp down tax cheats.

    “As part of compliance monitoring, KRA monitors the prices in the market and any persons putting products in the market that fall below the minimum cost structure are normally targeted for compliance checks. We derive the minimum cost structure from the analysis of the cost of inputs required for the production of a unit of alcohol,” said Ms Meyo.

    However, the competition watchdog, CAK, has protested KRA’s orders setting a binding minimum price of Sh150 and the threat to impound products selling below the price.

    “Restrictive trade practice which directly or indirectly fixes purchase or selling prices or any other trading conditions in Kenya, or a part of Kenya, are prohibited, unless they are exempt in accordance with the provisions of Section D of this Part,” reads Section 21(1((a) of the law. Part D allows manufacturers to recommend non-binding retail prices.

    CAK in 2016 fined British multinational SABMiller Sh2.4 million for engaging in restrictive trade practices by setting minimum prices for its products.

    In 2016, Crown Beverages, British SABMiller owned company that sells Redds, Castle, Nile Special, Keringet mineral water, Peroni and Miller was fined Sh2.4 million by CAK for setting the minimum prices for its products.

    While KRA focuses more on imposing taxes on Kenyan products, Kenyans who have nothing in their pockets will still go for as cheap as Ksh20 illicit drinks from Uganda and Tanzania flooded on porous Kenyan markets. We are a country that is under the leadership that is focused on taxing more than creating a conduce business environment more fillings of tax returns.