So, in 2004 EABL launched Senator Keg, an affordable alternative to illicit alcohol targeting low income consumers and was supported by government through an excise tax remission.
In the Budget Statement tabled before Parliament, the government intends to cut its excise tax remission from 80 percent to 60 percent, and the Treasury has been explaining that this decision is based on alcohol having inelastic demand.
In 2013, the government reduced excise duty remission from 100 percent to 50 percent doubling the price of keg and the consumer demand drastically plummeted.
It is a well-known fact that the price of alcohol can influence consumption levels and governments use taxes to influence consumption, heavy drinking and other alcohol harmful effects.
So, if government intends to raise more revenue from keg, it should keep the price affordable so as to expand that tax base
It is certain that in markets of alcoholic drinks that are price inelastic consumers are not sensitive to price changes, and these are the high-income consumers who are after quality and will imbibe in drinks like wine, whiskey and other drinks in that calibre.
