E-Malt.com News article: Tanzania: Local brewer warns against regular hiking of beer excise duty

A local brewer has cautioned the Tanzanian government against regular hiking of excise duty on beer and spirits, calling for industrial friendly fiscal policies, All Africa reported on February 20.

Serengeti Breweries Limited (SBL) Director of Corporate Relations, Mr Evans Mlelwa, said regular increase of excise duty on beer and spirits undermine growth of the industries and the economy in general.

Mr Mlelwa said this at a news conference during a familiarisation tour of police officers at the firm's plant in Dar es Salaam on February 19. The members of the Police Force were led by Deputy Commissioner of Police, Mr Adrian Magayane.

Explaining further, Mr Mlelwa said regular increase in excise duty ultimately affects end users who cover for all of the manufacturers’ production costs and taxes.

"Just after the increase of excise duty, producers tend to raise prices of their products and this has a very serious impact on sales," he said.

He noted that once sales are not improving due to high prices, brewing industries such as SBL cannot be able to expand usage of local raw materials due to low production caused by the drop in sales.

"The increase of excise duty and other levies does not reflect the increase on citizen's incomes," he said, adding that this trend tend to make consumers decrease expenditure on beer and spirits.

Giving an example, he said SBL has not been able to increase a number of barley farmers it supports through Local Raw Material Initiative this financial year because sales of beer have not been good.

By entering into a contract with farmers in various regions in Tanzania, SBL helps farmers grow barley and in turn buy it. Under the initiative, SBL provides extension services to the farmers in order to ensure that the crop is of the quality required for beer making as well as ensuring that harvest per acreage improves.

The company enters into contract with farmers and provides them with seed, pesticides and herbicides, thus lessening the burden of buying them on the part of the smallholder farmers.

Available statistics shows that there has been a general drop of between 15 to 20 per cent in the sales of beer and spirits between July and December last year.

Tanzania Revenue Authority (TRA) has reported a drop of 8 per cent excise duty revenue that was to come from beer and spirits products due to a drop in production in the same period.

The government increased the excise duty by 20 per cent in the 2014/15 financial year; 10 per cent in the 2013/14 financial year and by 25 per cent during the 2012/13 financial year.


20 February, 2015