IILA Tobacco Tax Proposals for FY 2018/19

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IILA Tobacco Tax Proposals for FY 2018/19

 TAX ADJUSTMENT PROPOSAL FOR THE FINANCIAL YEAR 2018/2019

 Action:

REINTRODUCTION OF A FLAT EXCISE TAX RATE FOR TOBACCO

PRODUCTS IN KENYA

(Effective Implementation of Article 6 of the WHOFCTC and Its Guidelines)

Outcome:

PROMOTING PUBLIC HEALTH AND INCREASING­ GOVERNMENT REVENUE

(A win-win policy action)

PRESENTED

TO

THE NATIONAL TREASURY

________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

THE PROBLEM AND RECOMMENDATIONS IN BRIEF

The Problem

The Cabinet Secretary for Treasury, in his budget speech for FY 2017/18 introduced a two-tier tax structure of Ksh 2,500 per mille for cigarette with filters and Ksh 1,800 per mille for plain cigarettes. This was a shift from the specific tax rate for all cigarettes set at Ksh. 2,500 per mille, previously effected in the FY 2015/16. The changes have resulted in the following:

  1. Tobacco Industry have manipulated the tax system, by introducing non-filter cigarettes to avoid the higher tax tier (i.e. Ksh. 2,500)
  2. Lost government revenue
  3. Non-filter cigarettes increase amount of tar consumed per breath hence more harmful
  4. Whereas nominal prices of cigarettes has remained constant, real prices have shrunk contributing to affordability of cigarettes.
  5. Tobacco tax administration difficulties reported by Kenya Revenue Authority
  6. According to the Ministry of Health, in 2017, Non-Communicable Diseases (NCDs) accounted for over 50% of bed occupancy in government hospitals. Tobacco use is the predominant risk factor for the major NCDs in Kenya.

The Recommendations

  1. Simplification of tobacco tax structure by re-introduction of a uniform specific tax rate for all cigarettes.
  2. Increase of the flat tax rate from Ksh. 2,500 per mille to Ksh. 3,100 per mille of cigarettes

Read full submission here: http://ilakenya.org/wp-content/uploads/2018/03/ILA-Tobacco-Tax-Proposals-FY-2018-19-1.pdf

By | 2018-03-28T16:00:31+00:00 March 14th, 2018|IILA Publications, Policy Briefs, Tobacco Control|0 Comments

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