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Time to reform ineffective tobacco excise tax policy

Health Opinion

Kenya’s cigarette excise tax policy is failing to reduce cancer-related mortalities hence there is a need to reform it. The government needs to implement progressive tax legislation that requires the tobacco industry to accept responsibility for its role in worsening cancer rates.

As it stands, the policy is not effective in reducing cigarette consumption. A smoker’s daily cigarette consumption in 2000 was 10.3 sticks. This figure rose to 12 sticks in 2012.

The lobbying power of the tobacco industry is responsible for blunting the effectiveness of the policy. The tobacco industry pushed back against the cigarette excise tax by interfering with the political process to improve taxation. The share of taxes on tobacco’s retail price fell from 75 per cent in 2008 to 23 per cent in 2020.

Currently, Kenya collects Sh12 billion of excise tax from the tobacco industry. On the other hand, our government spends Sh15 billion trying to reverse tobacco-related conditions. The industry is holding on to Sh19 billion annually by refusing to pay the fair tax advocated by the World Health Organization.

This economic vandalism is unacceptable and our government must make the tobacco industry account for these public health violations. The industry deceives the public by claiming that modern oral nicotine pouches are a safer alternative to combustible cigarettes. Policymakers must avoid falling into a trap by mindlessly believing the tobacco industry’s statement – without conducting a proper independent investigation into the impact of oral nicotine pouch use on public health.  

It is clear that the industry is unwilling to pay an appropriate tax on these products. Some industry leaders have told the Kenyan government that modern oral nicotine pouches are reduced-risk products compared to cigarettes. Therefore, any potential excise tax paid on them should be lower than the lowest tax tier for cigarettes. 

The government must reject this narrative. According to the World Health Organization’s Global Nicotine Reduction Strategy, nicotine exposure can harm the brain in ways that may permanently affect adolescents’ neurological development and mental health. Furthermore, early exposure to nicotine is associated with more severe dependence, which suggests that the developing brain may be more susceptible to permanent addiction. Given this evidence, there is a case for reforming the cigarette excise tax policy in Kenya to cover nicotine pouches with aggressive tax measures. More countries are exploring this option.  

The tobacco industry has previously claimed that vaping and smokeless tobacco were effective tools to stop smoking. We now know these claims are untrue; the industry promoted these products to maximise profits. Nicotine pouches should be approached with an aggressive tax policy so that the share of taxes in the retail price of these products, as well as that of cigarettes, is greater than 75 per cent – lest we repeat the mistake of trusting the industry with our health.  

Dr Cyprian M Mostert is the Chief Health Economist and Assistant Professor of Global Health Economics at Aga Khan University’s Brain & Mind Institute

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