Tanzania Daily News (Dar es Salaam)

25 January 2013

Tanzania: Higher Taxes Hit Hard TBL, Govt Loses Sh28 Billion

SIGNIFICANT increase in taxes on beverages has resulted into lower sales at Tanzania Breweries Limited (TBL) and consequently loss of government revenue at the tune of 28bn/-.

This was revealed to the Parliamentary Committee on Industry and Trade during a recent of the committee at TBL headquarters in Dar es Salaam. During the visit, the legislators witnessed some plants which have stopped production while others were under normal maintenance.

Providing information to the members of the committee, the TBL Director of Special Task Projects, Mr Phocus Lasway, said that sales started falling following the government's decision to increase tax by 25 per cent in last year's budget.

"This increase has caused boozers to significantly reduce consumption and some of our customers have resorted to drinking hard drinks including Gongo. "This has resulted in significant reduction of production, where sales during the run up to Xmas and New Year decreased compared to the same period six years ago," he said sadly.

He said that this has caused the company to suspend production at some plants because they cannot continue to produce while the market is low.

The manager appealed to the government to restrain from raising tax on beer for at least four years so that the situation can return to normal. He said hiked tax has not only affected their company but most beverage firms including liquor companies especially in rural areas, where people opt to drink illicit brews because of the higher prices every year.

He told the legislators that this tax increase has caused the government to lose over 28bn/- in revenues. Lasway mentioned some of the other challenges facing the company to include significant increase in levies paid to the Dar es Salaam City fire services and rescue squad, which has gone up from 400,000/- to 9m/- per year, while unreliable power supply and water shortages also affect daily production.

Responding to these concerns, the Chairman of the Committee, Mahmud Mgimwa, first praised the efficiency shown by TBL which is one of the top taxpayer in the country.

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