Beer Prices Increase: The illegality, effects on the masses

The draft State budget for 2015 which the Government presented in Parliament at the last budgetary session, showed an increase of over FCFA 400 billion.

The Government attributed the increase to the war against Boko Haram.

When The Post, at the end of the budgetary session asked the Vice President of the National Assembly, Hon Joshua Nambangi Osih, how Government intended to raise the additional revenue or funds, he said: “The Government has, in the 2015 Finance Law, among other things, increased the excise tax on beer and spirits.”

Osih asserted that the increase meant that “the price of a bottle of beer will increase in 2015.”

But the Government and even the brewing companies in the country were silent on the issue.

Rumours started circulating in Douala that the price of beer would increase by FCFA 200 as from January 1, 2015. Many wholesalers and operators of bars and off-licenses quietly bought large quantities of beer which they claim was for sale during the end of year festivities, but which were stored, hoping to make big profit when the price increase takes effect.

On December 31, 2014, breaking January 1, 2015, some proprietors of on-licenses exploited the opportunity of many customers drinking in celebration of the New Year to increase the price of beer. They claimed that the price increase was supposed to take effect on January 1, 2015.

The bar proprietors thus increased the prices from FCFA 200 to FCFA 400, depending on the choice of customers. Other off-license owners in many towns across the country joined in the illegal increase.

Consumers’ associations in Douala strongly condemned the price increase, which they argued would weigh heavily on the masses.

A member of one of such associations in Douala augured that the only thing that consoles Cameroonians is beer.

In panic, the Minister of Commerce, Luc Magloire Mbarga Atangana, refuted the price increase. Breweries also corroborated the Minister.

However, in a joint arête issued on February 12, 2015, by the Minister of Commerce, Mbarga Atangana, and the Minister of Finance, Alamine Ousmane Mey, Government officially increased the price of beer, wine, whiskies and champagnes in the country.

Effects Of The Price Increase On Consumers A debate is going on in the streets of Douala on the possible effects of the price increase. Divergent views are expressed on talk-shows on local FM radio stations by members of the public.

Some people are contemplating on cutting down their consumption rates due to the price increase, while others have sworn that the price will not make them reduce their consumption.

But as analysts put it, “in Cameroon, people do not only buy beer for their personal consumption. There are occasions like funerals where if beer does not flow, then nothing has been done.”

The Post has leant that if brewing companies in Cameroon had to transfer the entire increase in excise tax to the consumers, the official increase on a bottle of beer would be FCFA 200.

But the Government has apparently convinced the brewing companies to share the additional tax with consumers. This means that the profits of these companies will automatically drop.

When Hon Osih talked to The Post at the end of the last budgetary session, he said if the increase in the excise tax on beer has to be entirely transferred to the consumers; the price of a bottle of beer may increase by FCFA 300. He insisted that the excise tax is a tax on the poor, and that by increasing the tax, the “CPDM Government” has, once more increased tax on the poor.

He also warned that the decision to increase the tax on beer may backfire on the Government, if there is a big drop in the consumption of beer.

“The beer industry has, over the years, been paying the Government billions of FCFA annually as excise tax revenue. I am afraid that by irrationally raising the tax, many beer drinkers may migrate to other forms of brews or alcoholic drinks, instead of consuming beer.

A drastic drop in the consumption of beer will also mean a significant drop in the excise tax revenue. This situation will cause a lot of tax erosion, which the Government will find it difficult to meet up with its obligations.”

Increase In Flat Tax Hon. Osih also disclosed that Government has in the 2015 Finance Law, doubled the flat tax from 1.1 percent to 2.2 percent, while the revenue tax has been reduced from 35 percent to 30 percent.

“Like the excise tax, the flat tax is a tax for the poor, while the revenue tax is a tax for the rich. This is a clear indication, that the Government does everything to increase taxes on the poor, and reduce taxes on the rich,” Osih lashed out.