Proposal to tax nicotine products a welcome move

As quick as we are to render criticism upon people at often times, so should we be without hesitation to acknowledge and give credit where the same is deserved. 

We seize such an opportunity to salute the government’s proposed fiscal measures on nicotine products in the FY2021/2022 budget.

In the national budget statement presented to the National Assembly on Thursday, June  10, 2021, the National Treasury Cabinet Secretary Ukur Yatani proposed to introduce excise duty on products containing nicotine or nicotine substitutes intended for inhalation (without combustion) or oral application but excluding medicinal products.

The CS noted that these emerging products such as nicotine pouches are new innovations by the tobacco industry not currently subjected to taxation. The proposal made by the CS is to tax such products at Sh5.0 per gram (equivalent to Sh5,000 per kg).

From a public health perspective, this is a welcome move. It is encouraging that government is making efforts towards regulating these emerging tobacco and nicotine products; an issue that in the recent past has been faulted on account of lacking proper control measures hence exposing the public, particularly the youth to the harmful effects of nicotine consumption.

Nicotine is known to be a highly addictive substance that causes mood swings as it acts as both a stimulant and a depressant. The effects of nicotine consumption are widely documented, including a myriad of negative health effects, such as adverse side effects to the heart, brain, reproductive system among others.

Nicotine consumption increases blood pressure, heart rate and blood flow to the heart. It may also cause heart attack and stroke due to narrowing of the arteries and hardening of the arterial walls. The addictive nature of nicotine and products containing nicotine is what the manufacturers and sellers of these products bank on to sustain and grow their customer base and profits.

An effective regulatory mechanism is therefore needed to control access and consumption of these products in order to protect the public from the adverse health effects associated with their consumption. This obligation is fronted by the World Health Organization through the Framework Convention on Tobacco Control (WHO-FCTC) to which Kenya is a party.

Through Article 5.2(b) of the FCTC, WHO calls on governments to adopt and implement effective legislative, executive, administrative and/or other measures to prevent and reduce not only tobacco consumption and exposure to tobacco smoke; but also, nicotine addiction.

Kenya, having domesticated the WHO-FCTC through the Tobacco Control Act (2007) has the responsibility to design and implement policies and necessary measures to control and prevent nicotine addiction. One such measure is taxation.

Tax and price policies are known to be the most effective measures for deterring initiation of and continuous use of harmful products such as tobacco and nicotine products- also known as sin tax. The beauty of sin tax is that it serves a dual purpose by discouraging consumption of the harmful products while generating revenue for government. In other words, it provides a win-win for scenario for government and concerned stakeholders: healthier public and increased revenue.

As we adopt fiscal measures on the emerging nicotine products, it is important to maintain and actually improve the fiscal measures applied on conventional tobacco products. This is critical because these emerging tobacco and nicotine products; such as nicotine pouches can and are considered by users as substitutes to traditional tobacco products, such as cigarettes. Different tax policies could therefore lead to substitution where users switch to cheaper products or dual use of both traditional and emerging nicotine products.

The industry narrative that these products are “less harmful” or can be used to aid smoking cessation hence should be taxed lightly is misleading and only serves their interest of enslaving the public to nicotine addiction as they profit from it.

Furthermore, WHO cautions governments to be wary of this narrative; warning that there isn’t comprehensive evidence to confirm such claims. As such, it is right and in order to tax these emerging products, preferable to the most commensurate level to the conventional tobacco products.

As for cigarettes specifically, the government should consider harmonizing into one the current double-tiered tax structure applied to cigarettes; and further increase the rate. This will further solidify the public health gains obtained from the sin tax measures.

The National Assembly should therefore adopt the tax proposal on products containing nicotine or nicotine substitutes as recommended by CS Ukur Yatani. This paves the way for Kenya to improve the regulatory mechanism by adopting comprehensive fiscal measures covering both conventional and emerging tobacco and nicotine products.

Finally, as a manufacturing hub for such products in the region, Kenya thus sets a good example on public health for regional colleagues to learn from.

Celine is the CEO of the International Institute for Legislative Affairs.