Africa-Press – Tanzania. THE government is losing a whopping 1.2tri/- annually in tax revenue due to proliferating illicit trade in alcohol, according to a study.
The Managing Director of Tanzania Breweries Limited (TBL), Mr Jose Moran, said in Dar es Salaam on Wednesday, adding that Ernst and Young survey for TBL revealed that illicit and informal market of alcohol constituted approximately to 58 per cent of the overall beer market representing 1.2tri/- lost revenue to the government annually.
Mr Moran, who leads the oldest brewing company and the largest contributor to government’s tax revenue, said illicit trade in alcohol was the biggest challenge that limits the growth of the alcohol industry-an important source of government revenues, trade and employment opportunities.
“Illicit and informal alcohol trade is the biggest factor stopping growth of the alcohol industry,” he said in a presentation to senior reporters and editors of mainstream media about TBL, a member of the Anheuser-Busch InBev group of companies which dominates the beer industry in Tanzania, with a market share of around 77 per cent.
The formal alcohol market faced significant competitive pressure from the illicit and informal market due to relative affordability, he said.
Maintaining the relative affordability of licit alcohol presents a significant opportunity for the government to increase tax revenue through broadening of the tax base to the informal market, he said.
TBL is facing a big challenge of absorbing soaring costs of productions without raising prices of their products in the market because of sensitive nature of the market where customers could easily shift to cheaper illicit alcoholic products.
“The alcohol market is so sensitive that any price increase leads consumers to cheaper products in the illegal market,” he said.
According to him introduction of electronic tax stamps had inflated their costs of production which they had to absorb to maintain prices.
Tanzania Revenue Authority (TRA) introduced electronic tax stamps to the alcoholic beverage industry and cigarette companies in January 2019 to boost tax revenue. The taxman extended the electronic stamps to the sweet flavored water and other non-alcoholic beverages, like energy and malt drinks and soda later on the same year.
The Electronic Tax Stamps (ETS) system was rolled to the fruit and vegetable juices, bottled drinking water and music and film products last year.
Speaking about economic importance of TBL to the nation, Mr Moran said the brewing company was the largest contributor to the government revenue and a key partner in the socio-economic development.
TBL is one of the largest taxpayers in Tanzania having paid 3.7tri/- in the past 10 years—an average of 370bn/- per year.
According to him a gross value added by TBL to the economy was 613bn/- or 0.5 per cent of the total economy.
“We continue to be key contributors to government revenue in form of corporate tax, excise duty and value added tax amounting to 463bn/- thus retaining the honour of being one of the largest taxpayers in the country,” he said.
Mr Moran said TBL also plays a key role in the agricultural sector by using locally available raw materials which have significantly helped to increase employment and improve the lives of farmers.
TBL sources locally 74 per cent of the raw materials used every year equivalent to 130bn/-.
Last year TBL carried out a pilot programme with WFP for 2000 sorghum farmers where it supported the farmers with seeds, crop insurance, management practices, extension service and contracts to improve market access, he said. The programme resulted in a 70 per cent increase in sorghum production over the previous year.
TBL would expand the programme to support 4000 farmers and they expect to increase sorghum production to 10,000 tonnes.
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