Kenya: Bat Decries Push for Higher Taxes

Source from:  The Star  06/04/2013

CIGARETTE maker British American Tobacco says the industry is already over regulated and highly taxed adding that the renewed push for higher taxes is ill-informed.

After the World no Tobacco day last week, several lobby groups and the new Health Minister James Macharia called on Treasury to increase taxes for the tobacco products in the upcoming budget to make them less affordable and to discourage non smokers from trying them out.

BAT has reject these calls. "The tobacco industry is highly regulated, sells a legal product and we have a legitimate business.

We conduct our business in a professional and responsible way, abiding by the laws in all the countries we operate in, often going above and beyond our legal obligations,"said BAT Kenya's head of corporate and regulatory affairs Jerry Gilbert.

Aside from annual rise in 'sin tax' charged on products like beer and tobacco, the tobacco industry faces some of the toughest regulations aimed at easing spread of diseases associated with the product such as cancer.

Through the 2007 Tobacco Act, cigarette companies were banned from conducting any form of advertisements for their products. Last week, minister Macharia warned firms against veiled forms of marketing in the society, reminding cigarette manufacturers that their advertisements remain banned.

BAT said it has adhered to the law since the ban though noting that the move has denied the marketing industry of Sh12 billion that would have been used annually by the firm in advertising spend.

On the issue of tax, Gilbert said additional increases of tax on cigarretes will propel the illicit market where commodities sold are feared to be of a cheaper quality thus more harmful.

Gilbert said the illicit cigarette market will also deny the revenue authority a significant amount of tax.

BAT, which is one of the listed companies with the highest amount of dividend payout annually, warned that its shareholders will be greatly affected by the higher taxes.

In 2012, BAT's shareholders earned Sh3.25 billion with the minority shareholders pocketing a record Sh1.3 billion, the company said. Enditem