We have in mind the hard drinks these days packed in sachets popularly known as ‘viroba’ and to be found even in our remotest villages and the darkest corners of our urban areas.
Remember the recent incident, as reported by at least one Tanzanian TV station, of hundreds of label-less sachets of suspicious ‘viroba’ with a street value of several hundred million shillings impounded and confiscated by the Tanzania Revenue Authority right inside Tanzanian territory?
Remember that the presumably toxic contraband had actually “filtered” into our country from Uganda long before vigilance on the part of our officers saved the day for our country and nation?
Reports say honest dealers buy them from honest stores who access them the legal way from honest sources, which means the drinks make it to the market without cutting corners. By extension, this means that they attract appropriate excise duty and other taxes and are therefore invariably on the expensive side.
That is, relative to equivalents bought dishonestly from dishonest stores who will likely have accessed them illegally from sources at black market prices and therefore without having paid the taxes demanded by the laws of the land.
The fact is that the Tanzanian liquor market has been invaded by, and is flooded with, every kind of hard drink one can think of. And this has a telling impact of the country’s social and economic development in the sense that it puts public health at serious risk while also denying the government the revenue it so rightly deserves to get in the form of taxes.
But lest it be understood that we are out to apportion blame against any particular brand of liquor, it must be said many dealers are honest members of the business community and out to do an honest day’s job – and they should therefore not be associated with unscrupulous business practices.
In the circumstances, any mention of the brands most commonly in circulation is meant merely to illustrate the variety of the hard drinks in sachets at the disposal of the Tanzanian public and the need for the people to exercise care before they make any choices of the brands to allow to go down their throats.
Just as is usually done with respect to soft drinks, beers, bottled water, foodstuffs, cosmetics and various other consumables, it is crucial for agencies such as Tanzania Revenue Authority (TRA), Tanzania Food and Drugs Authority (TFDA), Fair Competition Commission, Police and the like to ensure laid down quality specifications are observed and defaulters face the full wrath of the law while the fully compliant are rewarded by being assured of a fair deal in the market.
Yes, as is well known, brand names and packaging styles can be very so alluring but blinding as to lead gullible dealers and consumers into temptation they would live to regret – which underlines the need for the likes of TFDA, TBS and FCC to intervene before disaster strikes.
A recent random survey in a sample of “official” retail liquor selling points has come across brands including Kiroba Original, K-Vant, Double Punch, Flash Gin, Pine Liquor-Necha, London Dry Gin, Boss Whisky, ZED, Premium Vodka, PAMA, Officer’s, 18+ Gin, REDDY Ginger Whisky, Flame, DOLLORS Gin, Samson, Coffee Spirit, Jonny’s, Champion, Premium Vodka, Rider Gin, Jonny’s, Black Bee, Simba Waragi, Shujaa, Haveon, Empire, Blue Skys, Crocodile Tears-Machozi Ya Mamba, Players, Highlife Gin, Charger Leaders, and Nguvu.
While the list may indeed point to the serious threat alcohol consumption poses to public health in our country, more economically minded observers and analysts argue that pervasive large-scale tax evasion by dishonest alcohol manufacturers and dealers is yet to draw as much attention as it deserves.
Meanwhile, some people wonder whether the real or most pressing problem relates to the quality of ‘viroba’, the easy accessibility and affordability of the drinks, or the mere fact that the drinks are distributed and sold in sachets.
My honest opinion is that the all-important question the government and other authorities ought to keep asking themselves is what ought to be done to arrest the problem and develop a workable and lasting solution.
Tax evasion translates into forgoing, indeed sacrificing, government revenue – with taxation coming to almost 60 per cent (42 per cent excise plus 18 per cent value added tax – VAT) government shareholding in every liquor firm.
It also means sacrificing industrialisation. This is why and how: In the absence of a level playing field where fairness and ethical business conduct hold sway, honest and tax-compliant investors end up with a raw deal.
Meanwhile, wayward ‘stakeholders’, including tax evaders especially in local industries, keep laughing all the way to their banks despite inhibiting genuine national industrial development and falling way short of appreciating the contribution of law-abiding investors and other members of the business community.
Further, there is the sacrificing of public health in that tax evasion means lowering prices by more than 50per cent and therefore making hard drinks more easily affordable and accessible to all – which would stand to damage the health of youth.
Many analysts believe that having mandatory control on prices would help, as tax evasion deprive the government of funds which, everything being equal at least as per TRA dream, would have been put to excellent use such as improving transport and communication.
Just a glance at taxation on alcoholic products now in use in Tanzania: 3,315/- per litre excise on hard spirits, 729/- per litre excise on beer, 2,236/- per litre on wine – while 18 per cent on product price and corporate tax stands at 30 per cent.
We would like to bring to the attention of the government and its relevant agencies that some brands of ‘viroba’ are being sold in the open market at between 250/- and 350/- per 50 ml sachets. This is well below the recommended retail price (RRP) of 600/- for a 50 ml sachet and 1,100/- for a 100 ml one.
Why do we see so few indications that many people take this fact seriously enough to demand immediate intervention with appropriate remedial action?
Why are so many of us taking lightly such a large-scale tax evasion scam through whose arrest we could build schools, hospitals, roads and other infrastructure, while sparing our beautiful country the “need” to beg for budget support? Or is it that so much donor assistance is flowing our way that we don’t need to be paid tax?
Fifth-Phase President Dr John Pombe Magufuli is working hard to clean up the dust of corruption and tax evasion in the country and it is most shocking seeing how the beer and spirits industry, arguably the leading revenue generator for the government, is cheating the nation through almost 60 per cent tax evasion.
The even sadder part of the largely self-inflicted tragedy is that so many small industries are cropping up daily in the country to exploit the gaping loopholes in the law, etc., with relative impunity.
Even worse, in some cases, the absence of information on the scale and nature of activities in the industry undermines the very basis on which agencies like TRA could have directed their resources to tackle this problem all the more effectively.
• The writer is a long-serving alcoholic beverage industry insider. Next: Specific ways to shield the government against loss due to tax evasion and other forms of cheating in the liquor business without punishing honest, tax-compliant dealers.