Chinamasa moves to boost beer drinking

via Chinamasa moves to boost beer drinking 27 November 2014

BEER prices are set for a dramatic fall after Finance Minister Patrick Chinamasa announced a reduction of excise duty tax on clear beverages from 45% to 40% effective January 2015.

The move comes after the country’s leading brewer Delta Beverages lager volumes over the six months to September, collapsed 25 percent in a development that must have alarmed Chinamasa since beer has become a key tax revenue stream as other sectors of the economy struggle.

Presenting his $4.1 billion, 2015 budget statement for the year 2015, Chinamasa said companies in the sector have undertaken to reduce retail prices.

“…excise duty was reviewed from 40% to 45% with effect from 1 December 2012,” said the minister.

“Mindful of the need not to undermine recovery efforts by the alcoholic beverage manufacturing industry and also in view of the current depressed aggregate demand for alcoholic beverages, I propose to reduce excise duty on clear beer from 45% to 40%, thereby stimulating growth in volumes.

“As a quid pro quo, alcoholic beverage manufacturers such as Delta Corporation, have undertaken to reduce the retail price. The introduction of bond coins will go a long way to assist towards this effort.”

Chinamasa said as a way of raising funds for “non-discretionary expenditures, Government levied excise duty of 5% on air time for voice and data, with effect from 1 October 2014”.

“Although the excise duty is intended to be paid by licensed operators, there is, however, an anomaly whereby sales between licenced service providers attract excise duty, thereby resulting in possible double taxation.

“I, therefore propose that special excise duty be levied on sale of airtime and data by licenced operators, with effect from 1 October 2014,” he said.

The treasury chief also announced that levies on cigarettes would increase.

There would also be a tax on tobacco growers to fund forestation activities to stem the tide of deforestation since the government funded land reform programme unleashed new farmers who do not have finance for electricity as well as the continued power black-outs.

“Excise duty on cigarettes was last reviewed on 1 December 2012. However, the current excise duty rate of $15 per 1 000 sticks does not reflect the social cost associated with consumption of hazardous substances,” said Chinamasa.

“I, therefore, propose to increase excise duty on cigarettes from $15 per 1 000 sticks to $20 per 1 000 sticks, with effect from 1 December 2014.

“I (also) propose to re-introduce tobacco levy on tobacco growers at a rate of $0.015 of each dollar of the selling price, with effect from 1 January 2015. The revenue generated will be ring-fenced to finance re-forestation activities”.