EABL raises concern over Senator Keg levy
The-Star.co.ke - Feb 24th 2014, 11:45
There are concerns of job losses in the beer industry following shut down of distributorship and outlets dealing in East African Breweries low-end beer Senator.
An estimated 7,500 distributors out of the original 12,000 that previously supplied Senator have closed business as the effects of a tax that was imposed on Senator keg beer begins to bite.
The tax led to a 25 per cent price increase and this has in turn locked out the majority of low-end beer consumers previously targeted by the manufacturer.
“We can only estimate the ripple effect of 7,500 outlets and the livelihoods they support in terms of employees and families could run close to 100,000,” EABL said in a statement.
Earlier this month the company said that slowdown in keg sales would see hundreds of jobs cuts. It estimated that revenues from the low cost drink had fallen by as much as 85 per cent.
The Treasury plans to raise Sh6.2 billion annually from the 50 per cent excise tax remission, but industry projections following the drop in sales of Senator shows tax collections could hover around Sh800 million.
Before Treasury’s ambitious plan, Senator keg was tax-exempted.
Senator was launched in 2004 as an innovative product of government and private sector collaboration to intervene and mitigate against the hazardous effect of illicit alcohol that had peaked in 2000.
But the high taxes has made it expensive and some experts are warning that this will make people troop back to illicit drinks.
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