The Drunken Race to Hook Africans on Beer

New Orleans  In Nariobi the question in a bar that always made you step back and think if you ordered a beer was whether you wanted it cold or warm, meaning at room temperature.   Given the state of refrigeration and the cost of electricity in the country, so many people had gotten used to drinking beer warm that it had become a matter of choice.   Now it seems things are changing because fierce competition among big international brewers has led to the introduction of cheaper beers in order to try and grab more money from the poor by hooking them on the lower prices.  Unbelievably, this push has government support.

Today, legal beer sales are only about 1% of total consumer spending in Africa and the Middle East, but two brewery giants, SABMiller and Diageo, have set their sights on making Africa where they will see their big expansion in coming years.   To do so, according to a surprisingly good article in the Wall Street Journal, they had to solve two problems:  “packaging and price.”   By negotiating agreements with seven different African countries to reduce taxes on beer, allowing the companies to make up the lost revenues through increased volume in sales, they won their tax breaks.  On packaging they started serving beer right out of the kegs rather than the bottles.  In a country like Kenya this has moved Senator, a beer that luckily for the company was introduced the same year that Barack Obama was elected U.S. Senator, to the top of the heap, costing only about a quarter a beer, as opposed to traditional favorites like Tusker or the ubiquitous home brews in the slums of Nairobi and the countryside.  The companies also claimed or conned the governments by saying more beer consumption would increase demand for farmer’s crops.

Sure this all sounds crazy, but as I have talked about in Citizen Wealth, there are lots of companies that have made billions by focusing on how to separate the poor from their few pennies.  In Africa the lineup of course includes fast food companies as well like Yum Brands and of course Walmart.

The health impacts are horrendous.  Regulation is nonexistent.   The exploitation is stark.

It is frightening to watch a disaster unfolding, even at a distance.

Beer in Africa Audio Blog

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Aaron is Right, Aviv is Wrong: The Wealthy Cannot Keep Escaping Taxes

Aaron Dorfman

Quito   A number of the big dog, nonprofit charities trooped over to visit with Congress to try to protect every dime of their tax breaks, especially the blanket deductions that favor the rich and superrich.   They were led by Diane Aviv, the longtime head of Independent Sector, the big nonprofits trade group that has recently been squealing like a stuck pig about any change in their favored loophole status.   Having run nonprofits for decades, I have to say it’s an embarrassing spectacle.  There is no way that Aviv and the mega-charities speak for progressive nonprofits.

Luckily, Aaron Dorfman, head of the National Center for Responsive Philanthropy, does, or at least tries to, according to the statement his organization released that was quoted in the New York Times:

 “If nonprofit leaders don’t want changes to the charitable deduction, it is imperative that we get behind the president’s call for higher tax rates on the wealthy,” said Aaron Dorfman of the National Committee for Responsive Philanthropy in a statement. “The majority of nonprofits know this is true,” Mr. Dorfman said, “and I urge the hundreds of nonprofit leaders who have traveled to our nation’s capital for visits with members of Congress today to clearly advocate for higher tax rates on the wealthy in addition to their advocacy in opposition to any changes to the charitable deduction.”

Ok, well he doesn’t quite speak for all of us, since the deduction does need some changes, as I argued a couple of days ago in these pages.   Nonetheless, Aaron, whom I have known back to his days as an ACORN organizer in Minnesota and Florida knows better and still has to work with these people and get invited to their club meetings from time to time, so this was clearly the best he could do by at least siding with the White House on the need for reform and more taxes on the wealthy, which was miles farther than the rest of these folks and the Independent Sector seem willing to do.

Their position is becoming a shameful case of self-dealing in the face of the clear and obvious need for equity and justice in the country.  How can so many of these big timers like Catholic Charities stand for that?  United Way, who is surprised, since they have been a business plaything for years in countless communities, but jeez!

And, for what?  Even Mitt Romney’s position was better than theirs!

There’s also pretty clear reasons to believe that Aviv and the Independent Sector are fudging on the potential impact of even the White House’s modest proposal to lower the cap on the deduction from 35% to 28% for families with incomes over $350,000 per year.   Also from the Times:

Capping the value of the deduction, as the White House has suggested, might reduce giving by as much as $7 billion a year out of $300 billion over all, according to an estimate by Independent Sector.  But other estimates have proved more moderate. For instance, the Center on Philanthropy at Indiana University last year analyzed the Obama administration’s proposal to increase marginal tax rates and cap the value of charitable giving. It estimated that itemized giving would have declined just 0.4 percent in the first year after being put in place and 1.3 percent in the second. “This suggests a relatively small direct impact, but combined with the weak economic climate, funding reductions and increased demand for services already affecting some nonprofits and their constituents, these changes are likely to have an additional negative effect in the long term,” Patrick M. Rooney, executive director of the Center on Philanthropy, said in a statement.

So, not only is Aaron right and Aviv wrong.  Aviv may be gilding the lily for her big time  backers and padding the facts, when we need a clear and united voice for nonprofits that it is time for more equity and justice for all Americans not just protection of special benefits and deals for Aviv and her buddies.

As Aaron says, “…it is imperative that we get behind the president’s call for higher tax rates on the wealthy.  The majority of nonprofits know this is true…”

Aaron speaks for us.  Please listen to him, not Aviv, and give us tax reform, including reform on charitable deductions!

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