This archive report was first published on 5 June 2020.
On June 5, 2020, the Treasury was weighing a decision that could have significant implications for the war against illicit brews.
The proposed reduction of excise duty remission on sorghum from 80 percent to 60 percent has raised concerns that it may encourage the consumption of illicit alcohol.
Beer companies such as East African Breweries Limited are already struggling due to the closure of bars to contain the spread of Covid-19, and a further reduction in remission would likely suppress their margins.
The price of bottom-end beer, such as Senator Keg, would rise, making it inaccessible to the targeted consumers and potentially leading to an increase in the consumption of illicit brews.
This would not only put the lives of consumers at risk but also reduce the tax revenue for the government and threaten the livelihoods of thousands of sorghum farmers.
A similar scenario played out with cigarette makers, where the introduction of the solatium compensation contribution levy led to a drop in profits for BAT Kenya and a decline in government earnings.
