Kenya still has ample room to increase its tobacco taxation rates above the current applicable tariffs if it reverts to a uniformed levy.
Accordingly, the government, through the National Treasury and Planning has been urged to reform the tax structure to conform to the best practice by introducing a uniform tax rate that gradually moves the country to achieve the 70 per cent share of tax in the total retail price of cigarettes.
This recommendation follows a study on effects of tobacco taxation released on Friday, which revealed that although tobacco taxation is recognized as the most effective control measure of reducing its consumption the current tax structure that Kenya uses is inferior.
The uniform tax performs better on account of increasing cigarette prices, increasing cigarette excise revenue and the total tax share in cigarette prices.
Further still, a uniform tax rate of Sh.2, 500 per 1,000 cigarettes would have pushed the share of total taxes to the retail price of cigarettes to about 58 per cent, which is lower than the recommended 70 per cent share.
The National Taxation Association National Coordinator, Ms. Irene Otieno while affirming the findings, stated that there is need to reform a better tobacco structure for Kenya to protect consumers rather than tobacco firms by increasing tobacco taxation levels for consumers.
“Our main concern is to address the high level of taxation that Kenyans are burdened with, but we don’t see quality service delivery. Citizens and individuals continue to bear a huge tax burden while services are not increased,” said Otieno.
Otieno explained that the study results are expected to inform progress towards better tobacco structure for Kenya by examining the effects of cigarette tax policy changes on cigarette consumption in Kenya.
“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 of Sh2, 500 consumption of cigarettes would reduce significantly,” noted Otieno.
She further went on to state that if the government increased tax on tobacco, then it will be able to net in additional revenue, which will help address health issues and also provide public services to citizens.
“Taxation on tobacco will contribute significantly to lower consumption of tobacco products which will safeguard any allocation of our taxes on Universal Health Care (UHC). Our expectation is that the Senate will protect the interest of their counties and support our initiative and increase taxation on tobacco,” added Otieno.
Present during the event was the National Taxpayers Payers representative, Boaz Munga who said that one of the key findings of their study would be to introduce uniform tax, which would result in a larger reduction in the number of smokers by 8 per cent.
“Globally tobacco has caused 7million deaths thus many bread winners die and leave their families suffering. Studies show that the poorest households in our counties, more than 10 per cent expenditure is on tobacco,” Munga said.
He recommended that stakeholders should work to re-orient tobacco control policy to protect consumers rather than tobacco firms and advised the government to introduce education and awareness campaigns to reduce tobacco use by 30 per cent by 2025.
One of the key recommendations was that the government introduces tobacco control interventions including education and awareness campaigns to enable the country to achieve its adopted voluntary target to reduce tobacco use by 30 per cent by 2025.
The study used the WHO Tobacco tax Simulation Model (TaXSiM) to examine the effects of cigarette tax policy changes on cigarette consumption in Kenya. The study undertook an extensive review of the literature on tobacco taxation focusing on Kenya experiences.
By Charity Kanyoro / Lucy Wambui
