Editorials

EDITORIAL: Excise tax revenue fall should be fully probed

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Mr John Njiraini, KRA commissioner-general. PHOTO | FILE

The Kenya Revenue Authority (KRA) has conceded, not for the first time, that excise tax revenues dropped considerably last year, ostensibly saddled by prolonged political campaigns.

Official data shows that the tax, mainly charged on alcoholic beverages and cigarettes, fell nine per cent in the last six months of the year. But manufacturers of these items have only recently complained that they are suffering at the hands of illicit traders who appear to have a free hand in the local market. Sales have slumped and with it taxes payable.

Alcoholic beverages and contraband cigarettes are being trafficked with abandon and some sense of impunity.

Spirits are also coming in through ports of entry under several disguises. The fact that you cannot sell distilled spirit without a KRA excise stamp under the Electronic Goods Management System means the counterfeits are being sold without being labelled.

Serious problems arise from this. One is that KRA is losing tax to the tune of billions at a time government is struggling to fund health, infrastructure and a burgeoning wage bill.

READ: KRA loses Sh7.3bn to fake stamps, goods

Second, it is most alarming that the health system has to bear a huge disease burden arising from consumption of these illegal products — including some in sachets that were outlawed years back. That is unacceptable. Besides, genuine manufacturers are losing out to criminals and jobs are getting lost in the process.

KRA commissioner-general John Njiraini accepts that in an election year, this outcome is abnormal. But he must go ahead and provide answers as to why this happened.  So should the Interior ministry, which is responsible for policing sale and movement of goods.

The probe should be with a view to prosecuting and shutting down all unlicensed distilleries, stopping illegal imports as well as recovering the billions lost in taxes.

Unless this happens, the natural suspicion is that the illicit trade was carried out with official connivance—not unprecedented in election years, with 1997, and hopefully not 2017, being infamous for massive illegal sugar imports.

The taxman and authorities must ensure Kenya is a place for doing clean business.