In 2008, the share of taxes on tobacco’s retail price was greater than 75 percent in Kenya -aligning with the World Health Organization Framework Convention on Tobacco Control recommendations.
According to Cyprian Mostert Chief Economist and Assistant Professor Global Health Economics at the Aga Khan University, Kenya’s share of taxes on tobacco’s retail price has regressed to 50 percent.
“The tobacco industry pushed back against the 2008 tax by interfering with the political process and undermining taxation to facilitate this tax decline,” notes Mr Mostert.
However, with the expansion of government expenditures for development and the potential of widening fiscal deficit, Kenya needs to focus on the channels of tax revenue generation.
Evidence shows that a well-administered tobacco tax leads to the desired result of reducing consumption and its crippling health consequences, and not producing the terrible economic outcomes often portrayed by the tobacco industry.
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Increased taxes and prices for tobacco benefit governments by increasing revenues, which can then be used for state services, such as healthcare.
According to Peter Kubebea, Chair of National Taxpayers Association “Increased tax in tobacco control offers a double solution, cessation of tobacco consumption resulting from unaffordability and higher revenue to the government”.
Tobacco stands as a potential source of higher revenue through its taxation and at the same time serves the public health goal by reducing tobacco consumption.
Article 6 of the WHO Framework Convention on Tobacco Control supports this approach as a way of reducing demand for Tobacco products.
Benefits of Increasing Tax on Tobacco
In addition, the raising of tobacco tax results in increasing tobacco prices and reducing tobacco consumption hence accruing benefits to the government in the form of revenue and on the other hand to public health through reduced tobacco-related diseases.
Effective taxation may also provide the needed resources to reduce the estimated Ksh. 200 billion gap in financing universal health coverage and covering the societal costs of tobacco use estimated at Ksh. 2.978 billion annually.
Moreover, to have an impact on excise tax revenue the uniform tax rate should exceed Ksh. 2,470 per thousand cigarettes.
The National Taxpayers Association hints that Kenya would have an additional 4.4 billion by applying a uniform tax of Ksh 3.5 per cigarette.
This tax will supplement other regulations currently in place to reduce tobacco use such as smoke free-zones, prohibition in advertising and promotion of tobacco products, graphic health warnings, and sale restrictions.
Numerous studies indicate that higher taxes on tobacco products is the most effective tool in reducing tobacco consumption and consequently improving public health while also increasing government revenues that can be used to fund health, priority national investments and programmes.
Furthermore, Governments across the globe face adverse consequences of tobacco use and over 8 million people die annually from tobacco-caused diseases. In Kenya, more than 8,100 people die annually.
The tobacco-related burden of disease and death has shifted from high income countries to lower-income countries, with over 80% of the world’s 1.3 billion tobacco users now living in low-income and middle-income countries.
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This can be attributed to tobacco industry marketing, industry influence in policy making and aggressive litigation tactics.
Tobacco Control Challenges
Nonetheless, Kenya is still one of the highest consumers of tobacco in sub-Saharan Africa in per person terms.
Advocates for tobacco control say that despite the progress made in global recognition of the importance of tobacco control in the development agenda and to the protection of public health, new tobacco control challenges are constantly arising.
Tobacco industry interference continues to be considered by countries as the most serious barrier to progress.
Other challenges include emerging tobacco products and their increase in sales volume.
