TOBACCO TAXATION: KENYA & THE REGION SHOULD NOT BOW TO TOBACCO INDUSTRY PRESSURE

Statement of Mr Joel Gitali, the Chairman, Kenya Tobacco Control Alliance
May 14, 2018

NAIROBI, KENYA – The recent explanations made with regards to the reduced revenue collection from tobacco and alcoholic goods by the tobacco industry in Kenya are vague and inaccurate. The industry cites that the reduced revenue collection was due to 1) The bad political situation that affected the economy as well as the functions of the government in the year 2017 2) Increased volumes of cheap counterfeit and contraband tobacco and alcoholic good in the country, denying the government revenue and 3) Sudden changes in the system of taxation of tobacco products done by the Treasury without consulting the experts (KRA)

The Kenya Tobacco Control Alliance (KETCA) is watching with a lot of interest what direction explanations concerning the drop in revenue collection by Kenya Revenue Authority (KRA) is taking. We are aware that tobacco companies have been fighting to ensure that taxes on tobacco products remain low. They do so because they know that high taxes make tobacco products expensive, consequently reducing demand for them. It should be emphasized here that, unlike other products, which are mainly taxed for the purpose of raising government revenue, tobacco taxation serves a very crucial purpose of reducing demand for tobacco products.

We would like to state that, the WHO recommended tax is 70% of the price. Kenya having signed and ratified WHO-Framework Convention for Tobacco Control, FCTC and having been the regional leader in matters tobacco control must adhere to this and impose the required taxes. Those talking of taxes as being too high are either talking for the tobacco companies or seriously out of ignorance. We should only touch on tobacco taxes when increasing them and not the reverse. The Tobacco Control Act of 2007 is meant to, among other objectives, reduce demand for tobacco products as opposed to the normal trend of taking measures to increase demand for useful goods and services. It’s a deliberate effort by the government to reduce production and consumption of the illicit tobacco products for the good of the country. No measures that might lead to increased farming, manufacturing or consumption of tobacco should be supported. Such measures are illegal. This includes budgetary or legislative action that undermines this objective and this should not be condoned.

Illicit trade in illicit products must be stopped by the government. Measures should be put in place to ensure that the vice is curbed. Policies and regulations should not be weakened so as to accommodate wrong doing. The systems should be strengthened so as to ensure that the gains we have made in tobacco control are not smoked away. We cannot increase consumption of tobacco in the country in the name of making tobacco products produced locally cheaper than the counterfeits and contraband. That is tantamount to surrendering to crime by undermining our own laws. It auctioning the country to tobacco companies.

The Cabinet Secretary for the National Treasury and the Parliament should stop making changes to laws on taxation without consulting the experts. The mess we have in reduced revenue collection might also have been as a result of the Cabinet Secretary coming up with changes without the input of KRA. We are aware that Kenya has the best brains and technology on the continent in taxation. Only a political mind can mess up the system by playing politics. Let institutions do their work professionally. KRA has always been on the side of the law (Tobacco Control Act 2007).

The same report of reduction in the amount of revenue collected has been heard from Uganda. This could be a scheme to influence the coming budgets in the sub-region. We are asking the East African Community (EAC) Secretariat and Legislative Assembly to uphold sanity and protect the region. The East African Court of Justice (EACJ) should also be watchful not to be misused by the tobacco companies in the EAC. It must be remembered that, the best way of collecting Government Revenue is by promoting the health of the people, preserving the environment and eradicating poverty, which is the trademark of tobacco farmers. We cannot realize the Big Four government agenda, Vision 2030 0r SDGs by playing games with tobacco.