ETS, Illicit alcohol costs Tanzania billions in lost revenue

Mbeya.The government could be losing hundreds of billions of shillings in tax revenue due to current costs of electronic tax stamps (ETS) and illicit alcohol, TBL Group Plc, said at the weekend.

But the government has always maintained that the ETS – which is owned by Swiss firm Sicpa – has helped TRA to raise the amount it collects as excise duty during the past three years.

But speaking to editors who toured TBL’s Mbeya plant here, the firm’s corporate affairs director, Ms Mesiya Mwangoka, said ETS has not resulted in an increase in revenue from beer.

Guided by TBL Group’s Mbeya Plant manager, Mr Emanuel Sawe, the tour sought show the editors the secrets behind the plant winning the Best Brewery, Quality Always Leaders, Engaging Leaders Award and Safety First Leaders awards in 2021 out of 28 plants that are owned by ABInBev in Africa.

“In fact, it has resulted in overall revenue losses to Government….The beer industry pays over 60 percent of the costs of the ETS system,” Ms Mwangoka.

Read: Manufacturers: Why ETS are a big burden

She told the editors that ETS costs Tanzanian alcoholic beverage manufacturers about Sh34 billion per year. If all the over 170 companies that are on the EST list are put to consideration, the amount that Tanzanian manufacturers export to Switzerland exceeds Sh100 billion per year.

TBL Group Plc alone, said Ms Mwangoka, pays about Sh22 billion in ETS costs.

This represents a month’s beer/spirit excise revenue to TRA. “If the money were not to be sent outside the country, at least Sh10 billion of it could be collected in form of profit tax to the Government. With the money paid in foreign currency, it means it does not have a multiplier effect on Tanzania as a country,” she said.

TBL believes that if the government decides to be serious in helping manufacturers to do away with unnecessary ETS costs, it (the government) could adopt a block-chain technology which would do the same task [as that of ETS] at a cost that is 90 percent cheaper than what the Swiss company offers.

“TBL has piloted a block-chain solution which is designed for full government ownership and integration of cheaper innovative technology on ETS across the manufacturing sector,” she said.

A study conducted by Ernst & Young showed that alcohol spending in Tanzania was small compared to other countries in the region. This, TBL says, was largely due to the factor of affordability.

As a result, any slight change in prices sends consumers to look for alternative means whereby they end up consuming illicit alcohol which is also costing the sector trillions of shillings.

For instance, while on average, an adult person spent only $5 on alcohol in Tanzania in 2019, in Kenya and Uganda, it was $70 and $63 respectively.

The sensitivity, said Ms Mwangoka, drives consumers to illicit alcohol and as a result.