Market News

Taxman collection from alcoholic drinks up 37pc

KRA head office at Times Tower. FILE PHOTO | NMG
KRA head office at Times Tower. FILE PHOTO | NMG 

The taxman last year raised Sh35.1 billion in excise tax from alcoholic beverages, which represented a 36.8 per cent rise according to the 2017 Economic Survey.

The Treasury netted more excise revenue from sale of cigarettes at Sh12.4 billion—bringing the total “sin” tax from beer and cigarettes to Sh47.5 billion or more than half of the same tax earned in 2016. Total excise tax in the year stood at Sh80.4 billion.

The survey, also disclosed that more Kenyans are now imbibing beer, wines and spirits with a major slump in export sales registered last year hardly affecting liquor manufacturers’ earnings.

In 2015, Kenya exported 65 million litres of liquor products but the sales drastically dropped by half to stand at 32.5 million litres last year, a drop which was absorbed locally.

It notes the government’s move to waive excise duty on beer made from domestically grown sorghum, millet and cassava seemed to have favourably affected consumption that grew by 5.6 per cent last year.

Wines and spirits consumption recorded the highest growth rate at 11.8 per cent with several global wines and spirits makers launching operations in the past year while others expanded production lines.

Mobile services saw the taxman rake in Sh15.5 billion while financial transactions brought in Sh11.3 billion. This means, the state received 75 per cent of excise revenue from liquor, airtime and financial transaction.

Kenya has the fourth highest beer consumption rate in East Africa at 18.8 litres per capita, behind Uganda (23.7), Burundi (22), and Rwanda (22) while Tanzania comes last with 18.4 litres.

The Economic Survey adds that wines and spirits earnings rose from Sh6.1 billion to Sh10.7 billion indicating rising levels of disposable incomes.