Treasury petitioned to reintroduce uniform cigarette excise tax
By Christopher Owuor, February 1, 2021
Steve Umidha @UmidhaSteve
National Treasury has been asked to re-introduce a uniform specific tax rate for all cigarettes to gain more revenue and reduce abuse.
International Institute for Legislative Affairs (IILA) said the current tier system denies the government revenue, arguing that all tobacco products should be taxed equally to prevent users from switching brands and types due to price differences.
The Nairobi-based economic think-tank, said the excise duty Act of 2015 created a simplified tobacco tax structure where all tobacco products were charged the same rate of excise duty irrespective of brand or price.
“Increase by 15 per cent excise duty on the current higher tiered products and make this rate the uniform specific rate applicable to all cigarettes,” said Philip Musamia, IILA’s head of Policy Development & Legislative Engagement.
He said increase in tax rate imposed will lead to an increase in the amount of solatium compensation fund tobacco firms are obligated to pay under the Tobacco Control Act 2007 and Regulations 2014.
Finance Act of 2019 imposed a rate of Sh 3,157 per mille for cigarettes with filters (hinge lid and soft cap) and Sh2,272 per mille for cigarettes without filters (plain cigarettes) and a further inflation tax adjustment of 5.17 per cent raised it to Sh 3,320 for filtered cigarettes and Sh 2,389 for those without.
But none of the adjustments on the aforementioned has been factored in the budget statement for the year 2020-2021, according to the institution, which now wants the figures reviewed.