There is a need to review the tobacco tax, so that it can be progressively increased to reach the industry position.
This was according to Ms Celine Awour, a Program Officer at the International Institute for Legislative Affairs( ILA) during the second of pre-budget hearings 2020 held at The Sarova Stanley hotel on January 29th 2019.
The Finance Act of 2019, which came into effect on the last quarter of the previous year, that is November, has raised the excise duty on cigarettes by 14.1 percent, with the prices of filtered cigarettes per mile being Kshs 3.021 and the filterless, Kshs 2,160.
This is a lesser excise duty rate than had been proposed by National Treasury, which had sought to raise excise duty on beer and cigarette products to 21 percent, referred to as ‘sin tax’, a move that had been met with condemnation from the manufacturers of the said product back in September 2019.
Regardless, the excise duty of 14.1 percent still means that the prices of cigarettes have gone up, thus increasing the chances of illegal cigarette packs coming in from the Ugandan border, a concern that had been expressed by the Alcoholic Beverages Association of Kenya and key players such as Mastermind Tobacco and British American Tobacco, last September.
While the cigarette industry in Kenya is lucrative, with 2019 half year profits from BAT being recorded at Kshs 2.53 billion, illicit cigarettes from Uganda make up the majority of what comes into the country, at 70 percent.
Another implication is that the illicit trade of cigarettes from Uganda to Kenya, is a detriment to what the common protocol of the East African Community (EAC) entails, such as the free movement of goods and services as well as capital across the bloc of six countries in the region.
Also present during the hearings was Mr George Orido, a Media and Communications Specialist, who decried the majority diversion of funds, at 55 percent, which was meant for artists in the 2019/2020 budget that instead went to Universal Health Care (UHC).
“ Artists must be able to access the Sport and Social Development Fund which was meant for Arts and Culture. The lack of policy to regulate the cultural industry is also a problem,” says Mr Orido.
His comments comes days after President Uhuru Kenyatta directed all Content Service Providers to be registered so that they could be in a position to receive their royalties at the Kenya Copyright Board (KCB).
The latter body has already agreed on the set taxes to be directed with the help of the Ministry of Information and Communication Technology (ICT), though it is awaiting to be gazetted by January 30th, 2019.
President Kenyatta further instructed that the Content Service Providers who are part of Viusasa and Skiza, to be eliminated so that they can be registered within the framework set by the KCB.