18 June 2012

Kenya: Taxing Alcohol Retailers Will Lead to Job Losses, Claim Hoteliers

MORE than 20,000 people in the entertainment industry are likely to lose their jobs following the government's move to tax alcoholic drinks retailers, players in the industry have said. Kenya Association of Hotelkeepers and Caterers executive officer Sam Ikwaye said Finance minister Njeru Githae's move is likely to have a negative impact.

Speaking to the Star, Ikwaye said Githae's move will affect alcohol sales. Traditionally, excise duty was paid at the source by the manufacturers. But with Githae's announcement in his Budget speech last week, retailers will be taxed. "As retailers, the industry will have no option but to pass this to the consumers and the expected outcome is for more Kenyans to opt for the second generation alcohol whose consumption is actually on the increase," Ikwaye said.

He said the move will result in massive job losses and business shutdowns. "Consumption of illicit brews will increase," he said. Ikwaye said there is likely to be oscillation in alcoholic drinks prices. He said this is because it will be hard for retailers to predict their profit margins. Ikwaye, who is the immediate former CEO of the Pubs, Entertainment and Restaurants Association of Kenya, said Nacada should use the Sh1 billion allocated to it to restructure itself so that its influence can be felt on the ground.

He said Nacada has no offices at the district level thus its influence is minimal. "So we hope the money is not going to be used in recurrent expenditures or to do other businesses as we have seen scandals in other departments," he said. His sentiments were echoed by the Council of Imams and Preachers of Kenya organising secretary Sheikh Mohamed Khalifa.

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