This archive report was first published on 3 October 2019.
On a typical Tuesday, Richard Karuri, a cigarette vendor at Jevanjee Gardens smoking zone in Nairobi County, goes about his business as usual. He exchanges pleasantries with his customers, hands them a matchstick, and watches as they take a few steps to join other smokers in a circle, puffing and blowing smoke into the air. Unbeknownst to Karuri and his customers, a heated debate is raging on in the corridors of power over proposed tax hikes on tobacco and alcohol products.
Four non-governmental organisations - International Institute of Legislative Affairs, Non-Communicable Disease Alliance, Alcohol Control Policy Network, and Kenya Tobacco Control Alliance - are lobbying President Uhuru Kenyatta to assent to the Finance Bill, 2019, which aims to increase excise duty on tobacco and alcohol products. The organisations argue that signing the Bill would be a step towards reducing health-related costs, which they claim outweigh the economic benefits of the two industries.
According to Emma Wanyonyi from the Institute of Legislative Affairs, the proposed tax hike is necessary to balance the health costs against the economic benefits. "We need to balance what the industry is contributing to the economy against the health cost at an individual level and at the national level," she said.
However, the alcohol and tobacco industry players have questioned the proposed tax hike, arguing that it will only fuel illicit smuggling of the products. They claim that the move is ill-informed and goes contrary to the concerns they raised when they engaged with the ministry in July. "This further proposed increase will only serve to make legitimate products even more unaffordable and Kenyan consumers more price-sensitive," read a joint statement by British American Tobacco, Kenya Wines Agencies Limited, and Mastermind Tobacco.
If President Kenyatta assents to the Bill, the price of a pack of cigarettes will increase by Sh8, while manufacturers of wines and alcohol will see an increase by Sh181 per litre. Spirit liquors will increase by Sh242 per litre, with the changes expected to start immediately the bill becomes law. Treasury estimates the increase will net Sh4.6 billion in additional revenue.
