The new Kenyan government plans to adjust the tax rates excisable goods and services to inflation, starting from October 1, 2022. The excise tax on alcohol will therefore increase along with taxes on several other excisable goods and services.
On September 13, 2022 Kenyans elected their new president: William Ruto. With the reaffirmation of his election victory by the supreme court, William Samoei Ruto has become Kenya’s fifth leader since independence. He has been the country’s vice president for the last 10 years.
Mr. Ruto’s emergence as Kenya’s president represents a paradigm shift in the country’s politics, according to the United States Institute of Peace. Mr. Ruto’s campaign was comprised of a social movement of workers, the jobless, peasants and other “hustlers”. At the same time, Mr. Ruto presides over a business empire that includes luxury hotels, ranches and a huge poultry processing plant, according to the New York Times.
Mr Ruto takes power in a country heavily burdened by debt that will challenge his efforts to fulfill sweeping campaign promises made to Kenya’s poor, according to PBS reporting. In his inauguration speech Mr Ruto he acknowledged that “clearly, we are living beyond our means.” Kenya is East Africa’s largest economy.
Mr Ruto has pledged to implement a new bottom-up economic model, according to DW reporting.
Evidence-based alcohol taxation as part of responsible fiscal and health policy?
Mr. Ruto and his vice president, Rigathi Gachagua, who also took the oath of office, both said they knew they were taking the helm of a nation facing mounting economic, political and social challenges, as per the New York Times.
Kenya is saddled with onerous debt, much of it borrowed to finance large infrastructure projects. Inflation is climbing, the currency continues to depreciate against the dollar and food and fuel prices are skyrocketing because of the war in Ukraine. Four back-to-back seasons of below-average rainfall have left over four million Kenyans hungry and thirsty.
This is the context and urgency in which the Kenyan Revenue Authority will increase specific rates of excise duty by up to 6.3% which is the average inflation recorded in Kenya in the 2021/2022 financial year. This measure aims to prevent taxes from being eroded due to imported inflation.
Once the inflation adjustment raises the excise taxes the prices of alcohol products will rise in Kenya.
- Beer tax will rise from Sh. 134 for every two bottles to Sh. 142.4.
- Taxes on wine will rise from Sh. 229 to Sh. 243.4 for every 208 liters.
- Taxes on spirits will increase from Sh. 335 to Sh. 356.4 for every 278 liters.
Excise duty will also increase for filtered cigarettes, bottled water, juice, sugar confectionary, and petrol and diesel.
New Kenyan President believes alcohol has no place among policy makers of the country
Meanwhile, Mr. Ruto is setting the tone for the country’s approach to alcohol harm by denormalizing alcohol and encouraging Members of Parliament (MPs) to be role models and stay alcohol-free at work.
The new president and his deputy Mr Gachagua are known for leading an alcohol-free way of life.
Both leaders plan to mentor the new legislators of Kenya to create strong leaders for the future of Kenya.
Prior to becoming president, Mr. Ruto called aside parliamentarians who were showing signs of heavy alcohol use to talk about their use and recommend cutting down or quitting. In an address since becoming president, he has again cautioned MPs about alcohol consumption.
President Ruto together with senior MPs plans to mentor new and young MPs to create better leaders for Kenya. There will be new programs to assist new members to understand their roles and appreciate their responsibilities.
I want to assure you that we will help you to grow. We are going to have programs within the party to assist new members to understand their roles and appreciate their responsibility,” said Kenyan President William Ruto, as per Pulse Live.Kenyan President William Ruto
Former Kesses MP Swarrup Mishra, is one who took the advice of President Ruto and quit using alcohol. Mr. Mishra used to waste a lot of money on alcohol before then deputy president Ruto advised him to quit alcohol use as it affects productivity.
Big Alcohol lobbying in Kenya
The position on alcohol taken by the new Kenyan President is a positive sign for the country where the alcohol industry aggressively lobbies against alcohol policy solutions.
As Movendi International reported earlier in the year,
- In April 2022, the Kenyan government proposed a 15% tax on alcohol advertising in the 2022/23 budget.
- The Kenyan government also proposed a 10% increase in excise taxes in the 2022/23 budget. Separate from the annual adjustment to inflation.
East African Breweries Limited (EABL) – a subsidiary of Diageo – launched a lobbying frenzy against the proposed 10% excise tax hike. EABL lobbying relies on old, worn-out, and disproven talking points and claims that the alcohol industry makes irrespective of the country or circumstance.
This is not the first time EABL has lobbied against tax increases and other effective alcohol policy solutions in Kenya. EABL previously launched an intensive lobbying attack when the Kenyan Treasury changed excise duty laws in 2018 to adjust alcohol excise taxes to inflation annually. This inflation adjustment for alcohol taxes is recommended by the World Health Organization. The adjustment mostly affects major Big Alcohol companies, such as EABL.
Strong and effective alcohol policy solutions are needed now more than ever in Kenya to protect people against the products and practices of the alcohol industry. In this regard, the new president’s stance on alcohol holds promise for all Kenyan people.
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