NAIROBI: BRITISH American Tobacco’s (BAT’s) Kenyan subsidiary has sided with antitobacco lobbyists in that country to challenge a new tax proposal for cigarettes that it foresees will make calculating taxes more difficult, less transparent and reduce government revenue.
Under the recommendations by Kenya’s parliament, cigarette taxes would be based on quality and not a single rate for all products. Excise duties of between 900 Kenyan shillings (R116) and 2,800 Kenyan shillings per 1,000 cigarettes have been proposed. Connie Anyika, head of government affairs at BAT Kenya, told a Kenyan publication that the proposed structure, based on the ex-factory selling price, was a step backwards for revenue stability.
It would reduce transparency and muddle tax calculations.London-based BAT owns 60% of the company, which is Kenya’s largest cigarette manufacturer. Okkie Kellerman, a tax executive at advisory firm ENSafrica, said any tax that was not standardised would create complications, which was why many states had a single value-added tax (VAT) rate.
“(As) the (proposed) tax would be calculated on differential rates, (new) systems would have to be set up to accommodate the different classes,” he said. This would add to the administrative challenges.
Antismoking lobbyists argue that varying tax rates would drive smokers towards cheaper brands, negating efforts to cut smoking. Lobbyists believe taxes should be brought in line with World Health Organisation standards.
The organisation recommends that at least 75% of the price of a cigarette pack should be taxed to dissuade people from smoking or help them cut down on it.
In its 2015 Global Tobacco Epidemic report, the World Health Organisation said about 6-million people died from tobacco-related diseases each year. This would increase to 8-million annually by 2030 if governments did not implement harsher taxes on tobacco products to reduce consumption.
