National Treasury asked to raise taxes on tobacco, sugary drinks and alcohol
Health & Science
By
Mercy Kahenda
| Mar 26, 2026
A lobby group is pushing the National Treasury to impose higher taxes on tobacco and nicotine products, sugar-sweetened beverages, and alcohol under the Finance Bill 2026.
The International Institute for Legislative Affairs (IILA) also wants increased taxation and regulation on vapes and pouches highly consumed by children and youth.
In the proposal submitted to the National Treasury, the lobby group wants an increase in taxation on wine and spirits.
IILA is advocating enhanced excise taxes on alcoholic beverages, tobacco and nicotine products, as well as Sugar-Sweetened Beverages in the 2026/27 budget.
The proposal draws on local evidence, previous legislative outcomes including the Tax Laws (Amendment) Act of December 2024 and international best practices in fiscal policy for public health.
In a memorandum on health taxes submitted to the National Treasury and seen by The Standard, IILA argues that higher taxes on these products would discourage consumption, reduce the burden on the health system, and boost government revenue.
This, according to the lobby group, shall reduce health and social harms, and restore the tax share to sustainable levels and recovere lost revenue.
If adopted, the proposals on alcoholic beverages would harmonise excise tax rates across all alcohol products.
This would be achieved through the adoption of a uniform ethanol-based excise system across all alcoholic beverage categories, ensuring taxation is proportionate to the volume of ethanol.
The approach aligns with the World Health Organization (WHO) Global Alcohol Action Plan (2022–2030) and complies with the East African Community (EAC) minimum excise rate of USD 6 (about Sh720) per litre of pure alcohol.
IILA is also proposing an upward revision of excise duty on beer from Sh22.50 to Sh33 per centilitre of pure alcohol to eliminate tax and price disparities.
According to the lobby group, these measures would reduce health and social harms, restore the tax share to sustainable levels, and recover lost revenue
IILA CEO, Celine Awuor notes that "Following the repeal of the inflation adjustment provision in the Excise Duty Act via Finance Act 2023, excise taxes on tobacco, sugary drinks and alcoholic beverages are not adjusted to inflation, hence the value of the excise tax and revenue price of tobacco is eroded, making the products affordable over time. "
This is dangerous as it erodes the efforts and essence of these taxes as a public health measure,” added Awuor.
IILA recommends the establishment of a legislated, multiyear excise tax escalation pathway that is bold and progressive enough to achieve significant results for health and the economy.
A simulation model for tobacco taxation for a five-year plan presented in the IILA submission outlining different scenarios based on increases of between 20 per cent to 100 per cent by 2029 predicts significant changes if bold increases are applied, compared to if the current rate (status quo) is maintained.
Taxation of 40 per cent on cigarettes, according to the organisation, is low, against WHO targets of at least 70 percent.
“While Tax Laws (Amendment) Act of 2024 adopted a harmonised rate for plain and filtered cigarettes as Sh4,100/mille, this change has not achieved the desired objectives of reducing tobacco consumption and raising public revenue since the increase was minimal, and the real value of this tax is eroding due to the repeal of automatic inflation adjustments in 2023,” adds the proposal.
Additionally, IILA proposes to the National Treasury to reform and strengthen tax structure of emerging nicotine products, such as oral nicotine pouches and electronic cigarettes.
"Taxes on these products are currently low, yet the products are becoming increasingly accessible to children and youth, due to the deceptive and glamorous digital marketing by the industry and promoters", says Ms Awuor.