- WHO says high tobacco taxes are rarely implemented.
- Only 41 countries, with 12 per cent of the world's population, have introduced taxes on tobacco products so that at least 75 per cent of the retail price is tax.
Current taxes on tobacco in the country are way below WHO’s recommended baseline of at least 75 per cent of the product’s retail price, says the National Taxpayers Association.
The association in conjunction with the Research Unit on the Economics of Excisable Products (REEP), says Kenya’s total tax on tobacco as a percentage of retail price stands at 46.12 per cent, 29 per cent shy the global benchmark.
“This is based on the price analysis per pack of 20 cigarettes,” the report reads.
The lobby says this is despite taxes being considered the most cost-effective way to reduce tobacco consumption, especially among youth and low-income groups, in turn cutting down the ballooning health costs in treating tobacco related diseases.
It further highlights that current taxes and the decision to exclude tobacco products in the 2023 Finance Act tax adjustments will not do enough to reduce affordability for reduced consumption.
Kenya’s affordability percentage of GDP per capita required to purchase 2,000 cigarettes of the most sold brand, stood at an average of 11.4 per cent last year.
Data by WHO shows the rate has been on the rise since 2018 at 6.8 per cent to 11.4 per cent in 2020, calling for further increase in taxes to lower the affordability level.
Compared to global benchmarks such as Bosnia, Israel and Slovakia who have their tobacco taxes as percentage of retail prices above the 75 per cent mark, the level is even more than double.
Their affordability rates as of 2020 stood at 6.09, 2.36 and 2.14 per cent, respectively.
“A tax increase that increases tobacco prices by 10 per cent could decrease tobacco consumption in Kenya by about five per cent,” WHO says.
Kenya Tobacco Control Alliance chairman Joel Gitali who spoke to The Star, echoed the findings saying the current taxation in Kenya is very low and what he terms ‘tobacco industry friendly’.
“It is not helping much, a reason why tobacco companies continue to record mega profits. The current tax is way far below the recommended mark by WHO, ranking the country poorly globally, mainly on the back of high degree of interference by tobacco industry,” Gitali said.
He insists that taxation on tobacco and nicotine products should continue every year with inflation factor strictly embedded in the policy adjustments, saying due to inflation effects, the products become cheaper if taxation remains where it is.
"Kenya had the best tax policies on tobacco products globally. It is only now that we have lost a great deal and our neighbours are overtaking us, especially Uganda and Ethiopia. They have stronger tobacco control laws and have banned e-cigarettes and oral nicotine pouches," Gitali added.
Nevertheless, WHO says high tobacco taxes are rarely implemented.
“Only 41 countries, with 12 per cent of the world's population, have introduced taxes on tobacco products so that at least 75 per cent of the retail price is tax,” it says.
It further highlights the rise in illicit tobacco trade that is making it hard to cut down consumption rates.
It estimates that one in every 10 cigarettes and tobacco products consumed globally is illicit.
British American Tobacco Kenya says increment in tobacco excise tax in the country over the past years, cumulatively by over 50 per cent since 2019, amidst the tough economic times, has prompted the consumer to shift to illicit products which are cheaper and widely available.
BAT says illicit cigarettes in Kenya stood at approximately 25.5 per cent of the total market as at the end of 2022, with majority being smuggled through the Uganda border.
“This represents an estimated annual loss in government revenues of over Sh6.5 billion. This trend suggests that steep excise increments do not lead to additional revenues, rather, they force consumer migration to illicit tax-evaded products,” BAT says.
However, WHO in a statement argues this, saying experience from many countries demonstrates that illicit trade can be successfully addressed even when tobacco taxes and prices are raised, resulting in increased tax revenues and reduced tobacco use.