Kenya Breweries Limited (KBL) forecasts a Ksh.588 million hit to sorghum and barley farmers’ income if the Kenya Revenue Authority (KRA) raises excise duty rates by 6.3 percent next month.
The setback is expected to affect an estimated 15,000 farmers as the brewer reduces its intake of raw materials used in the production of alcoholic beverages.
KBL, for example, runs its recently completed Kisumu brewer entirely on produce from contracted farmers.
While avoiding a further loss of nearly Ksh.20 billion to distributors and employment income, KBL wants KRA to impose a moratorium on raising current excise tax rates for the fiscal year 2022/2023.
This is in light of recent tax increases enacted as part of the 2022 Finance Act.
“Any increase in alcohol tax undermines alcohol manufacturers’ capacity for production and distribution of alcohol beverages, which supports micro, small, and medium enterprises (MSMEs),” said Eric Kiniti, EABL Group Corporate Relations Director, on behalf of KBL.
“Withholding any excise tax inflationary increase for the next year will allow manufacturers to focus on restoring confidence and job creation throughout the alcohol value chain, beginning with farmers.”
KBL joins a long list of industry stakeholders who oppose adjusting the rate of excise duty (on excisable goods) for inflation or 6.3 percent beginning October 1, 2022.
The Alcoholic Beverages Association of Kenya (ABAK), the Petroleum Institute of East Africa (PIEA), BAT Kenya, and Coca Cola are among those who oppose the amendment, which is still open for public comment.
Excise duty applies to petroleum products, alcohol, cigarettes, confectionery, bottles of water, and cosmetics.
Every October 1st, KRA adjusts the specific rates of excise duty by the rate of inflation in the previous fiscal year.