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State urged to sort out tax mess in tobacco sector

By Moses Omusolo | July 22nd 2021

Jobick Okoth harvesting tobacco at Dago village in Uriri, Migori County. January 21, 2021.  [Caleb KIngwara, Standard]

Two lobbies have taken the government to task again over the manner it deals with the tobacco industry.

The National Taxpayers Association (NTA) and the Kenya Tobacco Control and Health Promotion Alliance (KETCA) blame State’s reluctance to tax the tobacco industry adequately and efficiently.

NTA claims the State is too lenient on the tobacco industry activities that it argues are harmful. At the heart of the matter is the State’s taxation policy on tobacco manufacturers where they enjoy a two-tier excise tax system.

NTA says the Finance Bill 2021 expected nicotine pouches to be subjected to a maximum of Sh5,000 per kilogramme. This was, however, reportedly slashed to Sh1,200.

Cigarretes. [Elvis Ogina, Standard]

NTA Programme Coordinator Franciscah Marabu said the current tier system was more prone to tax avoidance and brand switching. “In the two-tier tax system, one tier is based on specific tax while the other on tobacco product characteristics. We are advocating for a uniform specific excise tax system,” she said.

KETCA wants the State to sort out the issue via taxation. “Increasing the excise tax on tobacco products is an effective way of reducing tobacco consumption,” argued KETCA’s Achieng Otieno.

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