BY TOM BRIAN ANGURINI
A new report by Uganda Alcohol Industry Association on the cost of brewing illicit alcohol to the economy has found out that government loses approximately Shs 1.6 trillion in unrealized taxes due to evasion of tax by the illicit trade.
The report shows that, between 2017-2021, the value market size of illicit alcoholic drinks increased at a 18.3 percent Compound Annual Growth Rate (CAGR) from USD577.8 million in 2017 to USD956.8 million in 2020.
In the same period, the total consumption of illicit alcohol recorded increased volume growth at a 9.1% CAGR, impacted by high inflation rates, low disposable incomes, poverty and a lack of regulation enforcement.
Illicit alcohol is widely sold directly from private households which are involved in the production, as well as consumption of these beverages.
According to the report, current penalties and punishment stipulated in the act are not sufficient in curbing regular or new illicit players in the production, sales and smuggling of illicit alcoholic drinks.
Punishment imposed and paying of fines are considered worth the risk in trading illicitly. Moreover, the inadequate enforcement allows illicit traders to continue operating and distributing the alcohol.
The report, titled “Understanding and Sizing Illicit Alcohol Consumption in Uganda” was released from research done in 2021 by Euromonitor International, a leading independent provider of strategic market research for the past 40 years.
Speaking at the launch of the report, the state Minister of Finance Planning and Economic Development said he was surprised by the amount of money that Government is losing through some lax and the not so strong laws on enforcement of the Enguli act which prohibits the manufacture and consumption of Enguli if one does not have a license.
He says the government shall relook at this law and seek to update it in enforcing the production and sale of alcoholic beverages.