BAT opposes plan to amend excise duty structure

By John Oyuke

Cigarette manufacturer British American Tobacco Kenya (BAT) is opposing plans to amend the Finance Bill 2010 to change the criteria for charging excise duty on cigarettes.

The company says the replacement of the current hybrid excise structure comprising of physical characteristics and Retail Selling Price (RSP), with a structure solely based on RSP, is unacceptable.

"We are concerned with the planned changes as they go against the spirit of the gains achieved by the Government in spurring revenue growth from the tobacco industry," BAT Kenya said in a statement.

The cigarette manufacturer said it was not consulted during the deliberations before the amendments were tabled in Parliament.

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"This is despite contributing over 80 per cent of the industry’s taxes and being recognised as the fourth largest taxpayer for the fourth consecutive year, by the Kenya Revenue Authority (KRA), with a remittance of Sh8.3 billion in 2009," it added.

BAT Kenya was reacting to a revelation by The Standard yesterday, that the Chairman of Parliamentary Finance Committee, Chris Okemo, has moved a notice to amend the Finance Bill.

The proposed changes means the current set up whereby excise duty is based on description of cigarettes — that is plain cigarettes (those without filters), soft cap (those with soft packaging) and hinge lid (those with hard packaging) — will not apply.

Though rates will remain unchanged, some cigarettes could move to a higher excise duty rate, while others could move to a lower rate, changing existing market dynamics.

BAT Kenya, however, said the Committee neither informed it of these far-reaching statutory amendments, nor did they invite it for discussion.

"Consequently, not only was the largest cigarette taxpayer in Kenya not consulted, but also, apparently, other critical stakeholders may not have been fully informed of the implications of the aforementioned amendments," added the statement.

It added the company is exploring all necessary steps to protect and defend its market share.