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Alcohol levy will tax firms to line pockets

EDITORIAL
By Editorial | July 17th 2013

Article 8 of the Alcoholic Drinks Control (Amendment) Bill, 2012 gives the relevant Cabinet Secretary power to charge brewers and importers of alcoholic beverages a “treatment and rehabilitation levy” of not less than two per cent of the price of the alcoholic drinks at the point of manufacture or importation.

The immediate result of the levy will be to increase the prices of these alcoholic drinks across the board, undermining the war against illicit drinks and narcotic drugs such as bhang.

Apart from giving the National Campaign against Alcohol and Drug Abuse (Nacada) a new pot of money to spend outside the control of Parliament, and county assemblies, the Bill gives no assurance that the money will be used for the intended purpose, other than vague reference to filing reports with the Auditor General.

Brewing mischief

In fact, suspicion that carpetbaggers are lining up to get a piece of the action by setting up rehabilitation centres is an early indication of the financial mischief that the expected windfall would create. The thinking behind the Bill is noble, but the lack of public oversight in line with the spirit of the Constitution is untenable.

We are talking about slashing the revenues of companies by two per cent even before their products reach the retail stores. If it had already been in place, it would have shaved about Sh2 billion off one brewer’s consolidated revenues for the year ending June 2012.

This suggests that the people behind the Bill should be able to demonstrate that the money raised will be used for the intended purpose and not to line the pockets of a few people.

The drafters of the amendment should also be required to ensure that Parliament and county assemblies have oversight. As it is MPs are being asked to approve a tax over which they have no control.

It is not hard to see there would be fewer objections if the funds raised are used not just for rehabilitation — which most young people are unlikely to take advantage of anyway — but more importantly to fund youth polytechnics.

These institutions would give the youth technical skills to improve their lives by getting jobs or being self-employed. Indeed, this could work well in tandem with the Youth Enterprise Fund.

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