The system through which tobacco manufacturers will pay excise tax was changed last week, with an MP who worked in the industry before saying it will allow Kenyans to access low-quality cigarettes cheaply.
Members approved a change to the method of charging excise duty as proposed by the Finance, Trade and Planning Committee.
If the Excise Duty Bill is assented to by the President, duty on cigarettes will be charged based on their nature as opposed to the types or weight.
The new rates approved by the House will be based on 1,000 cigarettes, known as a mille and based on a graduated scale, with the lowest quality being charged Sh900 and the highest Sh2,800.
“With this, the lower cadre of Kenyans will be able to afford good cigarettes,” said Finance committee chairman Benjamin Lang’at.
Balambala MP Abdikadir Omar Aden, a former head of trade in Eastern Africa for British American Tobacco, said this move would give Kenyans access to bad cigarettes and deprive the government of revenue.
“The committee is trying to push on us a regime that has failed. When this four-tier system was introduced before, the government lost a billion shillings,” he said.
The new system was, however, approved by the House and the Excise Duty Bill passed.
The Finance committee also initiated a change to the taxation proposed by the Treasury and removed excise duty on motorcycles set at Sh10,000 apiece.
Kenyans importing vehicles more than three years old will pay excise duty of Sh150,000, a reduction from the Sh200,000 proposed by the Treasury in the Bill, while those less than three years old will attract duty of Sh100,000. Treasury had proposed a tax of Sh150,000 from the date of first registration.
As part of the measures proposed to reduce environmental degradation, plastic shopping bags will be charged excise duty of Sh120 for every kilogramme.