Kenya: BAT Wants Price-Based Tax Structure Changed

Source from:  Daily Nation on the Web 05/06/2011

Nairobi - British American Tobacco Kenya has asked the minister of Finance, Uhuru Kenyatta, to introduce excise duty on cigarettes that levies a given amount of tax as opposed to the price-based tax structure. The firm asked the minister to change the tax structure in the forthcoming budget to excise tax based on the quantity of cigarettes. The current excise duty based on selling price led to cigarette makers competing on prices, which pushed prices down and consequently tax revenues. "Changing the tax structure will ensure that excise duty is sensitive and significant for government revenue," BAT MD, Gary Fagan, said on Wednesday. "With specific excise duty, we will have a stable environment by being able to maintain prices and enable government planning in terms of revenue." He pointed out that in June 2010, on average, the government collected Sh1,350 for every 1,000 cigarettes, but when the law was changed in December 2010, revenues dropped to Sh960 for the same. "It is a decision we did not understand, it was crazy but went through Parliament," Mr Fagan said. "We need to get back to Sh1,350 per 1,000 cigarettes for more revenue to the government and a predictable market." He was speaking to reporters in Nairobi after the company's AGM. Enditem