Wine prices are expected to rise while the cost of beer will fall under new proposals from the National Treasury, which has imposed excise duty on drinks based on their alcohol content by volume.
The Excise Laws (Amendment) Bill, 2024 seeks to restructure the excise duty rate on wine and beer in a move that would see the price of wine rise while the cost of beer and cider with an alcohol content not exceeding six percent will fall. .
“The bill makes the following amendment, restructuring the excise duty rate on wine including fortified wine and other alcoholic beverages obtained by fermenting fruits from Sh243.43 per liter to Sh22.50 per centimeter (10 millilitre) of pure alcohol.” The National Treasury said on Friday.
The average alcohol content of wine is between 11 percent and 13 percent. Low-alcohol wines have an alcohol by volume (ABV) of 10 percent or less while high-alcohol wines can exceed 20 percent.
For example, a one-litre bottle of wine containing 20 percent ABV, will attract Sh450 in excise duty from Sh243.43 at present, an increase of Sh206.57.
However, the new proposals will provide relief to beer and cider consumers with up to six percent ABV, as the actual excise duty paid on the drinks will decrease.
“The Bill also makes the following amendment: Restructures taxes on alcoholic beverages by reviewing the excise duty rate from Sh142.44 per liter to Sh22.5 per centiliter of pure alcohol for beer, cider, perry, mead, opaque beer and fermented drink mixes,” the Treasury added. On non-alcoholic drinks and spirits whose alcohol content does not exceed six percent.
For example, excise duty on beer brands such as Tusker and White Cap (500ml bottles) with an ABV of 4.2 percent each will fall from the current Sh71.22 to Sh47.25.
The bill also proposes waiving excise tax on spirits made from sorghum, millet, cassava or any other agricultural products with the aim of supporting farmers.
Alcoholic beverage manufacturers are also set to receive an exemption as the Treasury proposes to extend the excise tax payment period from 24 hours to the fifth day of the following month.
“It is proposed to increase the excise tax payment period related to alcoholic beverages from 24 hours to the fifth day of the following month. This is to ensure ease of administration of the excise tax on alcoholic beverages and reduce cash flow challenges,” the National Treasury said.
The bill makes no mention of addressing excise duty rates on spirits and beer that exceed six percent in ABV.
Setting excise duty rates on alcoholic beverages based on alcohol content by volume is part of IMF-backed recommendations to implement a progressive tax system in the country.