INCREASED LEVY

Experts praise uniform taxes on cigarettes, nicotine

Previously, unfiltered cigarettes had a lower tax, which made them cheaper

In Summary
  • The impact of a tax increase on consumption is greatly reduced if it is easy for smokers to switch to cheaper brands
  • The WHO says a uniform excise is easier to administer than a tiered system, where variable rates apply on tobacco products
"We pray MPs don’t do what they did in 2022 when the CS made proposals and they changed them in the house. We don’t need such retrogressive amendments. Any revisions should be upwards."
JOEL GITALI: "We pray MPs don’t do what they did in 2022 when the CS made proposals and they changed them in the house. We don’t need such retrogressive amendments. Any revisions should be upwards."
Image: Magdaline Saya

Health advocates have praised the government’s proposal to create a uniform tax structure for cigarettes.

Treasury CS Njuguna Ndung’u proposed that cigarettes with and without filters will now attract the same tax rate.

Previously, unfiltered cigarettes had a lower tax, which made them cheaper.

Although significant increases in excise taxes are known to be the most effective policy for reducing cigarette smoking, the impact of a tax increase on consumption is greatly reduced if it is easy for smokers to switch to cheaper brands.

In his budget statement on Thursday, the Treasury CS said the uniform tax will also prevent cigarette makers from easily cheating the tax collector.

“I also propose to review the excise duty structure on cigarettes in line with the research conducted and advise that recommends harmonisation of the excise duty rates for cigarettes with and without filters at the rate of Sh4,100 per mile (a thousand cigarettes). This will reduce the incentive for mis-declaration and illicit trade,” he said.

The World Health Organization says a uniform excise is easier to administer than a tiered system, where variable rates apply on tobacco products.

He also increased taxes on nicotine, which has been used to introduce a new line of products, such as pouches.

“I propose to increase the excise duty rate from Sh1,594.50 per kilogramme to Sh2,000 per kilogramme on products containing nicotine or nicotine substitutes to address their adverse effects on human health,” Ndung’u said.

“This excludes those approved medicinal products. Additionally, I propose to increase excise duty rate on liquid nicotine for electronic cigarettes from Sh70 per millilitre to Sh100 per millilitre,” he added.

Head of the Kenya Tobacco Control and Health Promotion Alliance Joel Gitali said this change is important in protecting poor Kenyans.

“It’s good they have harmonised taxes on cigarettes so people don’t have to switch to unfiltered brands because they are cheaper. That is what we wanted,” Gitali told the Star.

Gitali said the increase was a move toward the WHO’s recommended rates where taxes constitute 70 per cent of the retail price of tobacco products.

He urged MPs not to fall prey to cigarette companies when debating the proposals.

“We pray MPs don’t do what they did in 2022 when the CS made proposals and they changed them in the house. We don’t need such  retrogressive amendments. Any revisions should be upwards.,” he said.

“The tobacco industry is working hard and has been fighting for tax reliefs and holidays but we are praying that won’t happen.”

The International Institute for Legislative Affairs  has also been lobbying for higher taxes on tobacco and nicotine products.

The National Taxpayers Association, while praising the uniform tax, said it needs to go up.

“This tax will supplement other regulations currently in place to reduce tobacco use such as; smoke free-zones, prohibition in advertising and promotion of tobacco products, graphic health warnings, and sale restrictions,” NTA says in its policy brief on tobacco tax.

Tobacco has zero benefit to the human body. Its use kills about 9,000 Kenyans every year through diseases such as cancer, brain and heart diseases, according to the Ministry of Health.

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