Sharp Daily
No Result
View All Result
Friday, June 6, 2025
  • Home
  • News
    • Politics
  • Business
    • Banking
  • Investments
  • Technology
  • Startups
  • Real Estate
  • Features
  • Appointments
  • About Us
    • Meet The Team
Sharp Daily
  • Home
  • News
    • Politics
  • Business
    • Banking
  • Investments
  • Technology
  • Startups
  • Real Estate
  • Features
  • Appointments
  • About Us
    • Meet The Team
No Result
View All Result
Sharp Daily
No Result
View All Result
Home News

Cheaper Licit Alcohol, Less Illicit Brews?

Anslem Murimi by Anslem Murimi
February 17, 2023
in News
Reading Time: 3 mins read
Counterfeit alcohol nabbed by police and KRA

Counterfeit alcohol nabbed by police and KRA [Photo/Courtesy]

Methanol poisoning is a possible occurrence from the ingestion of ‘chang’aa’, Kenya’s most common surrogate alcohol, and is caused by the conversion of methanol to toxic chemical formate.

A common solution to methanol poisoning is the ingestion of ethanol, which stops this conversion. 

Ingestion of “normal” alcoholic beverages, which contain ethanol and no methanol, can therefore provide relief to those suffering methanol poisoning, one of the consequences of ingesting illicit alcoholic beverages such as ‘chang’aa’.

Similarly, the availability of affordable, well-regulated alcoholic beverages has the potential to be a solution to Kenya’s illicit brews problem.

RELATEDPOSTS

Should Kenya introduce a minimum tax rate? Lessons from around the world

January 30, 2025

Kenya’s tax dilemma: Balancing revenue growth with economic struggles

December 30, 2024

The substitution effect is the change in demand for a product as a result of a change in the relative price of the good compared to that of a substitute good i.e. if a product becomes more expensive relative to a substitute, some consumers will consume less of the product and more of the substitute. 

As taxes on alcohol increase, not all alcohol is affected equally. Licit alcoholic beverages increase in price as producers pass on increased taxes to consumers while illicit alcoholic beverages, which are not taxed, maintain their low prices.

This means the price of legal alcoholic drinks increases relative to that of illicit brews, leading to substitution by some consumers from consumption of the former to consumption of the latter.

According to Retail Trade Association of Kenya CEO Wambui Mbarire, “repeated tax increases on alcohol, for example, have created a situation whereby nearly half, about 44 percent of the alcohol consumed in Kenya is illicit.” 

Read: EABL Breaks Ground For The Construction Of Ksh1 Billion Microbrewery In Ruaraka

This substitution effect is also shown by Kenyans in border towns, who are willing to cross the border to buy alcoholic beverages which are more affordable in Uganda and Tanzania.

Moreover, there are reports of market dominance, in low-income estates such as Dandora and Mwiki, of cheap spirits that sell 250ml bottles of spirits for KES 120 against typical prices of KES 200 to KES 255 by evading taxes, providing competitive pricing. 

As these untaxed spirits also count as illicit alcohol consumption due to the lack of regulation, they provide a clear example through which we can observe the economic theory behind this.

Sin tax detaches product price from economic reality, creating a profit margin that traffickers in the black market grab as it exceeds the risks and costs of getting caught.

By reducing the taxes on alcohol, legal and well-regulated alcoholic beverages can be priced competitively against illicit brews, reducing consumption of the latter by incentivizing low-income earners to avoid consuming them.

Email your news TIPS to editor@thesharpdaily.com

Previous Post

How Poor Health Affects The Economy Of A Country

Next Post

We Expect A Continued Depreciation Of The Shilling-Cytonn Report

Anslem Murimi

Anslem Murimi

Related Posts

News

Co-op Bank posts KES 6.9 billion profit in Q1’2025

May 16, 2025
Agriculture And Economy
News

Lets get Kenya out of FATF list

May 9, 2025
News

The downside of Impact Investing

May 2, 2025
News

Leadership challenges at the University of Nairobi

April 24, 2025
News

Easter eggs and earnings: Growing your nest egg with CMMF

April 16, 2025
News

Geoffrey Ruku declares KES 377M net worth during CS vetting

April 15, 2025

LATEST STORIES

How Kenya’s E-Mobility shift could redefine urban planning

June 5, 2025

Economic liberators are the real heroes and heroines of the year

June 5, 2025

Affordable retirement planning for small businesses with CURBS

June 5, 2025

How Kenyan banks can modernize without marginalizing

June 4, 2025

Human rights concerns over activists’ treatment in Tanzania

June 4, 2025

Decoding stock-based compensation

June 4, 2025

Comparative advantage is the secret to real economic take off

June 4, 2025

Understanding inflation and its impact on everyday life

June 4, 2025
  • About Us
  • Meet The Team
  • Careers
  • Privacy Policy
  • Terms and Conditions
Email us: editor@thesharpdaily.com

Sharp Daily © 2024

No Result
View All Result
  • Home
  • News
    • Politics
  • Business
    • Banking
  • Investments
  • Technology
  • Startups
  • Real Estate
  • Features
  • Appointments
  • About Us
    • Meet The Team

Sharp Daily © 2024