Kenya: BAT Oppose WHO''s 70 Percent Tax Proposals

Source from:  The Star 10/30/2012

British American Tobacco Kenya has strongly opposed a proposal by the World Health Organization for the introduction of a minimum of 70 per cent excise duty on cigarettes.
 
The company says such arbitrary tax will further drive growth of illicit trade which will further rob governments of revenues. BAT said the tax measures were proposed without considerations of specific country's' conditions.
 
"Policy options should be geared towards each government to devise the tobacco tax policies it thinks appropriate for its country - which should not be up to the WHO to determine," Peter Ndegwa,head of marketing finance.
 
Kenya has changed the tobacco tax regimes several times in the past. In June last year the government introduced a value based tax system of 35 per cent of Retail Selling Price with a minimum collectible excise of Sh1,200 per mille.
 
Before that there was an excise tax regime which was based on product characteristics and retail selling price. "BAT advocates for a single, specific excise rate that is simpler to administer, that improves tax collection efficiencies and facilitates more predictable and sustainable Government excise revenue,"
 
WHO through the Framework Convention for Tobacco Control is also pushing governments to adopt a fiscal policy and tax earmarking for all taxes collected from tobacco industry to be directed towards public health initiatives. "This is being done without regard for individual state public health or development priorities," he said
 
The renewed contention between cigarette makers and the health organisation and lobbying to governments comes as the world heads for a conference on November 12 to 17, that could see the proposals inch closer to being ratified.
 
The industry currently face the challenge of counterfeits products where it is estimated about 12 per cent of the cigarettes sold in the market are counterfeit. This results in a loss of government revenue of Sh 1.25 billion. Enditem