Tobacco Control and Health Promotion Alliance (TCHPA) has proposed the retaining of annual inflation adjustment for all tobacco products and alcoholic beverages in the ongoing submissions for the 2023 Finance bill.
In their proposal, TCHPA stated that the removal of the annual inflation adjustment for tobacco products and alcoholic beverages will have a negative impact on health and economy.
“Removing the annual inflation adjustment for Tobacco products, alcoholic beverages and sugar sweetened beverages could have negative health and economic effects and will only benefit manufacturers. Not adjusting inflation means revenue loss at the time when the government is struggling to raise revenue,” TCHPA Chairman Joel Gitali said in a statement on their submissions to the 2023 Finance Bill.
According to the Tobacco Free Kenya advocates, keeping the adjustment will decrease the price hence increasing the uptake and revenue loss.
Gitali added that the bill does not state an increase in excise duty on tobacco and nicotine products which is a matter of concern as statics show approximately 9000 Kenyan lives are lost annually due to tobacco usage.
“The 2023 finance bill does not specifically state an increase in the excise duty on tobacco and Nicotine products and this raises concerns to us, as tobacco control advocates,” he stated.
“It is crucial for a product with such detrimental health effects to be subject to higher taxes. Taxation has been proven to be an effective tool in reducing smoking rates and ensuring that tobacco duties contribute significantly to government revenues,” he added.
The excise tax on tobacco and nicotine products plays a vital role in deterring consumption, promoting public health, and generating revenue for the government.
Further, TCHPA has said that the complex tax structure creates loopholes and opportunities for tax evasion, which ultimately reduces the overall revenue collected.
They have urged the government to simplify the excise tax structure which will lead to increased revenue generation.
“A simplified structure would make it easier to monitor compliance, reduce administrative costs, and enhance revenue collection. Furthermore, increased tax revenue could be allocated towards healthcare initiatives, anti-smoking campaigns, and education programs, thereby contributing to the overall well-being of the population,” the submission to the National Assembly stated in part.
Many countries have successfully simplified their tax structures and witnessed positive outcomes, such as reduced tobacco use, increased revenue, and improved public health.
By adopting similar approaches, Kenya can benefit from the experiences of other nations, avoiding potential pitfalls and achieving desired outcomes more efficiently.
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The simplification of Kenya’s excise tax structure for tobacco and nicotine products is a necessary step towards promoting public health, generating revenue, streamlining administration, encouraging innovation, and aligning with international best practices.
According to the World Health Organization, tobacco and nicotine products should be taxed at a higher rate of 70% for several reasons.
The World Health Organization in line with their recommendations for Kenya, emphasizes the need to protect public health policies from interference by the tobacco industry.
The WHO emphasizes the significance of safeguarding public health policies, including taxation, from the influence of the alcohol industry.
Research has demonstrated that the alcohol industry employs different strategies to undermine or influence alcohol control measures, such as taxation, in order to protect their profits and market interests.