- Health experts have warned that as it stands, the policy in place is not effective in reducing cigarette consumption.
- Globally, data by WHO shows the cost of treating tobacco related illnesses and conditions is more than Sh20 billion annually.
Image: JACK OWUOR
Kenya should further increase taxes on tobacco products to reduce smoking and in turn cut down on expensive treatment costs associated with consumption, the National Tax Association has proposed.
NTA argues that the sector’s exclusion from increased taxes in the 2023 Finance Act is not good for the country’s health.
The association in its advocacy campaign maintains that tobacco taxation is the best way so far in repricing and reducing the consumption, thus the government should not relent in adjusting the policy upwards.
Data by Tobacco Control Board (TCB) shows at least 9,000 people die annually from tobacco induced illnesses, with a single affected family spending more than double the cost of a single user’s purchasing cost for a year.
This means, for a low end user consuming the normal cigarette which retails at about Sh15, with the daily average sticks consumption at 12, a person could spend about Sh65,880 in a year.
In case of an illness, this person could spend more than Sh130,000 , putting pressure on small households which are currently grappling with the high cost of living.
Globally, data by the World Health Organisation shows the cost of treating tobacco related illnesses and conditions is more than Sh20 billion annually.
Health experts have warned that as it stands, the policy in place is not effective in reducing cigarette consumption.
According to Cyprian Mostert, a chief health economist at Aga Khan University’s brain and mind institute, lobbying by the tobacco industry is responsible for blunting the effectiveness of the policy.
“The tobacco industry pushed back against the cigarette excise tax by interfering with the political process to improve taxation. The share of taxes on tobacco’s retail price fell from 75 per cent in 2008 to 23 per cent in 2020,” Mostert says.
He adds that currently, Kenya collects about Sh12 billion in excise tax from the tobacco industry while on the other hand, the state spends Sh15 billion trying to reverse tobacco-related conditions.
“The industry is holding on to Sh19 billion annually by refusing to pay the fair tax advocated by the World Health Organisation.”
This year’s Finance Act saw the government for the first time spare the main targeted excisable goods which saw alcohol, cigarettes and nicotine products excluded from the tax hike.
This could be to allow the sector some space to absorb the shocks of past hikes.
Since July 1 this year, cigarettes and other tobacco substitutes attracted fees on excise stamps of five per cent which is up from 2.8 per cent.
The plans to adjust the rates upwards came barely eight months since prices of the goods increased on higher excise tax, after Parliament passed the Finance Bill 2022, in June last year.
From July 1, 2022, tobacco substitutes including non-combustible tobacco attracted excise duty at Sh3,750, more than double the previous Sh1,500.