Buganda Kingdom has supported the proposed excise duty on opaque beer, traded as Chibuku saying the brand had posed unfair competition for Ngule, the kingdom-promoted brew.
The statement comes a day after State Minister for Planning David Bahati tabled tax measures for the financial year 2018/2019 with a proposal to introduce value tax rates on spirits and wines and excise duty on Chibuku.
Chibuku beer, one of the brands brewed by Nile Breweries, is fermented from whole maize, enriched with sorghum malt. But Buganda Kingdom Finance Minister Robert Waggwa Nsibirwa says the brand had enjoyed a tax-free regime for so long, unlike other brands which are brewed with local content.
He cited Ngule beer, a brew produced by Uganda Breweries Limited (UBL) through a partnership with Majestic Brands- the investment arm of the kingdom. The beer is made from cassava which is sourced locally from Buganda and Uganda.
“Chibuku is not being taxed, this competition has enjoyed many years of no tax and it has made us lose market share. We are requesting that since the two beers are made from local content, they are both half a litre, the same shelf life of 6 months, sold in the same bars, we propose that they both enjoy the same tax rate,” said Nsibirwa.
He, however, added that the proposed rates are still discriminatory considering Ngule is taxed at 30 percent or 650 Shillings per litre which is double than the proposed tax on Chibuku. Government is proposing a tax of 230 Shillings from every litre of Chibuku in the new tax measure. Chibuku beer is sold between 1,000 and 1,200 Shillings while Ngule is now sold at 2000 Shillings.
“Our request is for price parity for all brands whose local raw material content is above 95 percent especially since both beers are supposed to be affordable enough to recruit from unbranded and untaxed alcohol which is cheap and abused by youth,” said Nsibirwa.
Meanwhile, a group of Youth Activists also appeared before the Finance Committee defending the proposal by the government to tax Alcohol.
The Executive Director, Uganda Youth Development Link, Rogers Kasirye together with Rogers Mutaawe argued that there is need to increase the tax on alcohol and all beers to reduce on the consumption rate as well as improving on the food security in the country.
Kasirye argued that despite Uganda being ranked highest in alcohol consumption, less revenue is being earned from the sector as compared to other countries in the region.
“Alcohol industries are the largest revenue producers according to the 2016 statistics where Rwanda collected 16 percent out of USD 8.37 billion, Tanzania collected USD 47.43 billion, Kenya collected 20 percent out of USD 70,529 billion while Uganda collected 13 percent out of USD 25.53 billion far lower than most sub-Saharan African countries,” Kasirye said.
Kasirye said that a lot of revenue is lost as a result of low percentage of taxes hence the need to align the tax regime to other East African countries.