Kenya: Big Alcohol Lobbies Against Alcohol Tax Increase
East African Breweries Limited (EABL) is vocal in its resistance against the proposal for increasing alcohol taxation by the Kenyan government. The EABL is a subsidiary of the multinational alcohol giant Diageo, the second largest liquor maker worldwide.
Last year the Kenyan Treasury introduced changes to the law, and Excise Duty will now be reviewed annually, with the rate pegged to the average rate of inflation for the past year – this is a policy recommended by the World Health Organization as evidence-based, cost-effective alcohol policy best buy.
Kenya’s inflation is set to rise, driven by high food and fuel prices, in part due to prolonged drought. Rising inflation will thus increase alcohol taxation, from currently 30% to 35%. This increase is affecting companies with an annual income of more than Sh500 million.
The EABL is using usual arguments taken out of the Big Alcohol and Big Tobacco playbook in order to discourage the alcohol tax increase. One of these is the claim that increases in alcohol tax will lead to price increases and push people towards illicit brews.
Increasing the tax base means we also have to pass some of it to the consumer,” said Kenya Breweries Limited Managing Director Jane Karuku as per Daily Nation.
The truth is EABL is in control of how much of the tax increase is passed to the consumer. Furthermore, the answer to illicit brews is not reduction of taxes of alcohol but proper and effective law enforcement and support schemes for informal brewers to transition to more sustainable means of earning a living.
EABL further argues the policy to increase taxes will harm business and threaten the jobs of farmers. This argument is disregarding the health, economic and social burden of alcohol use which is identified as a major obstacle to sustainable development.
Alcohol Harm in Kenya
The harm from alcohol is significant in Kenya. The country is ranked at the high end for years of life lost due to alcohol. The health consequences are observable specially in Kenyan men who suffer more from alcohol use disorders (7.1%) comparative to the WHO African region.
It is evident that Kenya needs a comprehensive alcohol control policy to curb the harm and improve health of their citizens. The excise duty reviewed annually and being pegged to inflation is a positive move by the government in this direction. Increasing alcohol taxes is recommended by WHO in the SAFER technical package.