Banjul Breweries Ltd (Julbrew) Fight Against Exponential Beer Tax Proposals!!

Alagi Yorro Jallow

I am not an economist, unfortunately, the proposed new tax hikes on Banjul Breweries Ltd from ten percent to seventy-five percent are poorly designed. From a tax viewpoint, this tax hike, have respectively risen exponentially and would adversely affect the business climate of Julbrew. This levy may be viewed as punitive with consequential damages. In the bad faith context, the government’s takes aim at tax increases, has risen dramatically. It is legitimate to tax wealth. But the levy is crude, distorting and hard to enforced. And that prospect would squash investment and enterprise.

 The long and short of it all is a demonstration how public policies can promote or kill an entire industry that ostensibly restrict economic benefit and rate of productivity growth. The Gambia government has killed so many industries and enterprises through poor economic and financial policies to an agonizingly large degree. This policy tax hike on Banjul Breweries Ltd needs to be reversed. Tax increases bring to the fore a set of commonly held reservations regarding the taxation of capital income from savings and investment. The principal among these concern that taxing capital income hampers economic growth and job creation.

By cutting expenditure to raise more taxes, you are withdrawing money from the market. When you are in financial crisis, you will see all sorts of desperate measures. The economy is not doing well, and the government has taken a lot of debt. This government’s mismanagement and plunder are a matter of public record. The government of president Adama Barrow is now stuck between the hammer of the markets and the anvil of politics. Most of the proceeds of the runaway borrowing could not be traced because they were never invested in the economy in the first place. They are in a debt crisis and they cannot pay, so let everyone bear the consequences. Where is the next target for taxation?  Would it be medicine?  If they know their problem is in borrowing, then the simple thing to do is stop immediately. An Alcoholic cannot deal with their addiction without giving up drinking.

 A seventy-five percent tax hike on Julbrew beers is way too high and will erode levels of entrepreneurial activity decline. It is becoming increasingly important that such a tax policy does further hinder economic dynamism. Unfortunately, a recent proposal by ministry of fiance and economic affairs to increase taxes on Julbrew beer without consultation would unmistakably do this, deter innovative activity and kill successful business.

 As Julbrew entered the 1980s, it was enjoying four decades of uninterrupted growth. It sat atop the thriving Gambian brewery industry. Banjul Breweries Ltd has a clear vision of their company’s positioning and strategy. Julbrew had become a monument to its own success. Its culture and operations reflected the mission and vision of its founders and they saw their challenge as simply keeping up with the steadily increasing demand for beer.

In every civilized and democratic society, it is the sole prerogative of National Assembly members to initiate the process of law-making and devising of national policies after taking public input. It is the prime rule of a democratic process that no law or policy should be made unless a thorough debate is held in the National Assembly. A cabinet minister cannot always try to bypass National Assembly processes and then act without a “democratic behavior and culture” on the part of government businesses.

  Every year, budget-making exercise is entrusted to bureaucrats sitting in the Ministry of Finance and while the National Assembly members conveniently restricts their role to a silent approver. Due to non-participation of public representatives in budget-making, the financial managers and tax collectors have always persistently failed to overcome fiscal deficit and remove fiscal imbalances as their tax policies that are narrowly based on collecting taxes at source, without bringing mighty sections of society within the tax net or collecting what is actually due from tax payers.

It does not help that this government continues to deny the obvious and worse still is implementing adverse economic policies which are destroying the private sector. This trend has been on over the years. Most of the economic sectors have fallen victim to such ill thought out policies. Even when they are eventually reversed the impact lingers on for long.

The government should tame its spending by developing a budget that reflects the economic realities of the day. It needs to tighten its belt and live within its ever-emaciated means. The days of debt driven growth are gone. Any further incremental borrowing will come at a very high economic price.

Most importantly the government needs to cede the role of growing the economy to the private sector. This means reversing all the nonsensical anti-business policies implemented over the past five years. These should be replaced with incentives and policies that facilitate the private sector to operate optimally.

It also needs to stabilize the policy environment as the endless uncertainties are scaring away investors. There is no easy way out of the current economic mess. Simplistic roadside declarations will only make things worse. You also cannot tax your way out of an economic crisis. The more you postpone hard decisions, the harder it will be to forestall an economic crisis which is knocking furiously at the door.

The Minister of Finance should have advised the government, the Attorney General and Justice Minister should have advised the government that you just can’t wake up and introduce a tax on your people without consulting them and without the National Assembly members for consultation. The Finance minister cannot unilaterally impose unreasonable taxes without go to the people’s representatives at the National Assembly regarding the Banjul Breweries tax increment. So, it’s illegal.

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