Press Release: Parliament vote on Excise Bill 2015 regarding Cigarette Taxation Counter productive

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Press Release: Parliament vote on Excise Bill 2015 regarding Cigarette Taxation Counter productive

For Immediate Release

2nd September 2015

The International Institute for Legislative Affairs (IILA) is a not for profit organization that works with policy makers, government departments, members of parliament and other stakeholders to draft and lobby for pro- people legislation and policies. IILA has been involved in tobacco control advocacy since 2004 and has during that time worked closely with the Ministry of Health (Division of Non- Communicable Diseases- DNCD and the Tobacco Control Board- TCB) in the enactment and implementation of tobacco control legislation in the country.

IILA condemns and opposes the recent vote by parliament on the excise Bill 2015 by parliament that among other things proposes taxation based on brand as opposed to uniform taxation. The bill among other things proposes the amendment to the First Schedule (a) (iii) by deleting the item on “Cigarettes containing tobacco or tobacco substitutes” and the corresponding rate of excise duty and replacing it with the following new items—

• Plain cigarettes or cigarettes with ex-factory selling price of up to Shs.2, 750 per mille @Shs 900 per Mille

• Soft cup cigarettes with ex-factory selling price of Shs.2,751 to Shs. 3,750 per mille @ Shs.1200 per mille

• Soft cup cigarettes with ex-factory selling price of Shs.3,751 to Shs. 4, 750 per mille @ Shs.1,800 per mille

• Hinge lid cigarettes or cigarettes with ex-factory selling price of more than Shs.4,750 per mille@ Shs.2,800 per mille

Impact of proposed changes to the Excise Bill 2015

1. The proposed changes are counter- productive and is unlikely to deal with tobacco consumption in Kenya. It will only raise the prices on specific brands and in effect force consumers to opt for cheaper brands. The proposals also go against conventional models of tobacco taxation. According Framework convention on Tobacco Control (FCTC) not only does effective tobacco taxes significantly reduce tobacco consumption and prevalence; tobacco taxes are also an important source of revenue. It is therefore vital that tobacco products should be taxed uniformly because of the negative health effects.

2. The amendment will also lead to revenue loss by the government. This is because the current tax rate is Kshs 1,200/= per mille or 35% selling price; and the Bill as presented by treasury proposes that this is increased to Shs. 2500 per mille. The proposed amendments by the National Assembly fall below this rate. Furthermore, the amendment can be easily manipulated by the manufacturers through price changes and thus impacting on tax projections and actual revenue levels.

3. The determination of tax policies based on Ex-Factory Prices is very problematic in implementation and thus it makes tax administration problematic. International practices show that countries are shifting from this and are increasingly adopting Specific Tax Regimes that are periodically adjusted to cater for inflation.

4. Kenya is already on track in tobacco tax administration and is seen as a global leader in this area. The tables below show the trends in tobacco tax structures and rates, culminating in the present across Board rate of Ksh. 1200 per mille or 35% of Retail Selling Price (RSP).
“Good tobacco tax policies have enormous potential to encourage quitting amongst tobacco users, prevent young people from starting and simultaneously generate considerable tax revenue. The World Health Organization (WHO) recognizes Tax and price policies as one of the most effective strategies for combating the tobacco epidemic by reducing demand for tobacco and tobacco products” said Vincent Kimosop, IILA chief executive officer.

IILA Appeals to the President to:

1. NOT assent to the Excise Duty Bill, 2015 as approved by the National Assembly on August 27th 2015. We request the president to call on the National Assembly to consider reversing their decision and retaining the proposal by the Cabinet Secretary as contained in the original excise Bill 2015.

2. Direct the Cabinet Secretary of Health to:

i. Re-sensitize the relevant Committees of Parliament on Tobacco Control and importance of tax and price measures; including the dangers that the amendments pose.

ii. Convene an Inter- ministerial Meeting to address multi- sectoral concerns on Tobacco Control and call on government departments to speak in one voice by prioritizing Public Health over commercial interests

For more information contact:
Lynn Kabaka,
Communications and Advocacy,
International Institute for Legislative Affairs (IILA)
Cellphone: 0720803717
Email: Ikabaka@ilakenya.org

By | 2018-03-16T16:03:28+00:00 September 2nd, 2015|Bills, Notices, Press release, Tobacco Control|0 Comments

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This Sliding Bar can be switched on or off in theme options, and can take any widget you throw at it or even fill it with your custom HTML Code. Its perfect for grabbing the attention of your viewers. Choose between 1, 2, 3 or 4 columns, set the background color, widget divider color, activate transparency, a top border or fully disable it on desktop and mobile.