Don’t grant cigarette makers tax holiday
By Elizabeth Mbugua and Celine Awuor | December 7th 2020
In response to the global tobacco control efforts to fight the prevalence of tobacco use, which results in more than 8 million deaths annually, the tobacco industry is now pushing the agenda of introducing “less harmful” products.
One such product that was introduced in 2019 by British American Tobacco (BAT) Kenya is the nicotine pouch known as Lyft. This product, which is being fronted by the cigarette manufacturer as an alternative to smoking is unlikely to result in any substantial health benefits.
Currently, Lyft is registered as a pharmaceutical drug under the Pharmacy and Poisons Board, a move that has the potential to dilute tobacco control efforts and move the focus from complete cessation to use of ‘safer’ products.
The fact that these pouches are being sold in almost all points of sale, making them accessible to young people, may be seen as a tactic by the industry to hook a new generation of nicotine users.
As if this is not enough harm to Kenyans, BAT has requested for a tax holiday that it feels is justified by the size of direct investments expected from the local plant production and export market.
We agree with economist Larry Summers that there is need to tax things that are killing us; those that are bad for our health, like tobacco and nicotine products. Failure to tax such products, in this case the nicotine pouches, poses a great risk. To start with, there is no evidence to show that smokers who have switched to alternative products have, indeed, been able to quit.
On the contrary, the most probable result is dual use of both cigarettes and the nicotine products or worse still, a new nicotine user progressing to smoking in search of a stronger high. This is because as they are currently packaged, the pouches are at different levels of potency. What is the end game when a user surpasses the strongest pouch? They stand the risk of using cigarettes to meet their need.
Nicotine pouches may also trigger some non-communicable diseases as it has been proven it narrows arteries and interferes with blood flow. It is also costly to fuel nicotine addiction and this may lead to socio-economic challenges at the individual and national levels. At the latter level, the pouches may increase the healthcare burden as a result of morbidity and mortality caused by use of nicotine.
Request for a tax holiday is an outright abuse of the international and national tobacco control laws. Under section 12(a) of the Tobacco Control Act, 2007, the Ministry of Finance, now the Ministry of National Treasury and Planning, is mandated to implement tax policies and where appropriate, price policies on tobacco and tobacco products so as to contribute to the objectives of the Act.
In the same manner, regulation 32 of the Tobacco Control Regulations, 2014 prohibits public authority from granting incentives, privileges, benefits or any other preferential treatment to the tobacco industry to establish, advance, or run their businesses.
Further, the regulations provide that such a public authority should be guided by the priority to tackle the adverse health, social, economic and environmental impacts of tobacco growing, manufacture, sale and consumption in Kenya while implementing investment and tax laws, and other polices related to tobacco.
All these provisions are in line with the guidelines for implementation of Article 5.3 of the World Health Organisation Framework Convention on Tobacco Control, particularly, guideline 27 (7) which provides that tobacco industry should not be given preferential treatment such as providing partial or complete exemption from taxes.
The request is also one of the major tobacco industry interference tactics employed by the industry to weaken strong tobacco control policies exaggerating the economic importance of the industry.
While BATK is loud on the potential the nicotine pouch plant has to Kenya’s manufacturing and economic growth, it has chosen to completely ignore the economic drain that will be directed to cure the catastrophic consequences of the product.
It would also be absurd if the tax holiday is granted at a time when the country needs all the revenue it can collect in order to respond to the current economic hardships brought about by the Covid-19 pandemic.
Although there are no laws in the country directly addressing the taxation and regulation of novel products by tobacco industry, the country should adopt the guidelines given by WHO of developing tax rates that are not far off from the traditional products in order to discourage initial and further use of these harmful products.
Ms Mbugua and Ms Awuor work with the International Institute for Legislative Affairs
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