Tax officials have stated that the new tax on alcoholic drinks, notably beers, wines, whiskies and champagnes that was implemented in Cameroon on February 16 is not only aimed at redistributing wealth, but also checking the health hazards posed by these products to the population.

This information is contained in an explanatory note issued last week by the General Directorate of Taxes in the wake of the increase in prices of alcoholic drinks locally manufactured or imported.

The rate of price increase on such alcoholic drinks ranges from FCFA 50 to little more than FCFA 4,000 all taxes inclusive.

It is explained that the tax known in French as “droit d’accise,” is imposed on some products considered luxurious such as caviar, hand and necklaces, precious stones, luxurious cars, among others, for the purpose of redistributing wealth.

“This tax applies especially to products considered hazardous to health such as alcohol, tobacco…,” the explanatory note maintains.

It states that the entire amount collected from the recent increase in the taxes on alcohol will be paid into State coffers and this will contribute in covering the charges and missions of public service.

“This revenue equally serves the authorities to cover negative externalities linked to the consumption of these products as they have a very high cost in matters of public health,” it stated.

Maintaining that there are several ways of calculating the tax notably the ad valorem and the specific taxation methods or the mixed system that combines the two, the tax officials said before the reform, Cameroon was applying only the ad valorem method based on a 25 percent proportional rate. “With the reform, our country opted for the mixed taxation system, very close to the best international practices in the domain as recommended by international institutions, notably the World Health Organisation, WHO,” the tax experts hold.

The consequence of the rise in prices of the alcoholic drinks is that, with the legal provisions now in place, the consumers will pay only the additional amount exclusively linked to the specific “droit d’accise” tax and the corresponding Value Added Tax, VAT.

Article 8 of the joint arête specifies that no increment in the prices other than what is legally authorised following the readjustments will be tolerated.

The explanatory note states, for example, that the increase in the price of a 65cl bottle of beer must be FCFA 100 at most, no matter the brand of the drink; and that the increment in the price of a 33cl bottle of beer must be FCFA 50 and not more irrespective of the brand of the drink.

“As fruits of the concertation between Government, operators of the brewery sector and consumer associations; this increase in the prices of alcohol preserves the purchasing power of the consumers and the interests of the brewery companies,” the explanatory note further stated.