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Charge same tax on high, low-end cigarettes — Lobby

Study says uniform tax will reduce consumption and increase revenue

In Summary

•  Study says charging same tax on high, medium low-end cigarettes is best way to reduce smoking, discourage new smokers and increase revenue.

• Kenya has a tiered tax system for cigarettes and tobacco products.

 

Tax Justice Expert Vincent Kimosop and National Taxpayers Association National Coordinator Irene Otieno during a conference on taxation and tobacco consumption on July 11.
TOBACCO TAX: Tax Justice Expert Vincent Kimosop and National Taxpayers Association National Coordinator Irene Otieno during a conference on taxation and tobacco consumption on July 11.
Image: FAITH MUTEGI

The National Taxpayers Association wants the government to charge the same tax on all cigarettes — high, medium and low quality.

Charging a uniform tax on all cigarettes will reduce the number of smokers and increase state revenue, it says.

An NTA study says taxation is recognised as the most effective way to control tobacco consumption.

 

However, the tiered tax structured in Kenya is inferior to a uniform tax in reducing consumption of tobacco and enhancing excise tax revenue, it says.

The report was released on Friday by Boaz Munga, a senior policy analyst at Kenya Institute for Public Policy Research and Analysis.

The study examined cigarette taxation and how it affects consumption.

The study shows that a uniform tax would result in a larger reduction in the number of smokers and larger reduction in the consumption of cigarettes.

Under a uniform excise tax rate consumption of cigarettes would decline by three million, compared to Sh761,000 for the tiered tax.

Further, uniform tax results in a much larger excise tax revenue increase of 37 per cent,relative to six per cent increase in revenues for the tiered specific excise system.

“The government through the National Treasury should reform the tax structure to conform to  best practices by introducing a uniform tax rate that gradually achieves the 70 per cent share of tax in the total retail price of cigarettes,” Munga said.

 

Technical tax adviser at the Tax Justice Network Africa Vincent Kimosop said all stakeholders especially the Health ministry work towards implementation and the ratification of international conventions and protocols to which Kenya is a signatory.

The report also calls on the government to enhance tobacco control interventions including education and awareness campaigns. The country aims to reduce tobacco use by 30 per cent by 2025, a voluntary target.

This will not be achieved if the current rates of decline are maintained.

Kenya is a major producer of both raw tobacco and manufactured tobacco products.

An estimated 11.6 per cent of adults, 2.65 million, use tobacco products.

 In 2013, the Global Youth Tobacco Survey indicated that 12.8 per cent of boys and 6.7 per cent girls aged between 13 and 15 used tobacco.

 (Edited by V. Graham)