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More taxes on beers could hurt industry

By Billy Rwothungeyo

Added 26th April 2017 12:13 PM

They (government) has engaged us and Uganda Breweries and announced that they intend to increase taxes. It is our big fear in the year coming ahead. How will the industry cope with this taxation?” he said.

Ahead of the new financial year that starts in July, Greg Metcalf, the outgoing managing director of Nile Breweries has warned that more taxes on beers could adversely hurt the growth of the industry.
Speaking to the New Vision exclusively in his office in Luzira, a Kampala suburb said government has mooted the idea of a 15 percent tax increase on beer.
 “They (government) has engaged us and Uganda Breweries and announced that they intend to increase taxes. It is our big fear in the year coming ahead. How will the industry cope with this taxation?” he said.
“The industry will have to make a choice. The taxes will either be passed on to the prices, or the industry tries to absorb it, but a 15 percent increase on taxes is a lot to absorb, I am not sure how we can afford to do that.”
If beer prices go up, Metcalf fears that fewer people could buy beer, which will in turn affect the revenue targets of government.
“If government increases tax by 15 percent, volumes could fall by 20 percent, if you do the mathematics, you will realize that government could make less money, and not more money. That is what we are worried about. Does a consumer have enough money not to worry about the increase in beer price by sh500 or does he go back to the illicit alcohol?”
Metcalf is stepping away from the business he has spearheaded since 2014. He also served in the same capacity for a year in 2008 before being posted to Ghana.  His resignation comes after the takeover of SABMiller, Nile Breweries’ parent company, by AB InBev.

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