Tax hike on e-cigarettes lauded despite key fund remaining dormant

e-cigarettes

The proposal by the National Treasury to increase tax on liquid nicotine, a substance used in e-cigarettes has been lauded as a right move towards cutting tobacco use in Kenya.

While submitting the 202/2023 budget estimates Thursday last week, the National Treasury Cabinet Secretary Ukur Yatani proposed to increase excise duty on liquid nicotine from Kshs. 1per unit to Kshs. 70 per millimeter in what he said is meant to prevent tobacco use by making the vaping devices less accessible to users including to school children and the youth.

According to the National Taxpayers Association (NTA), the excise duty increment is timely.

“Studies globally have proved that increase in excise duty for tobacco related products will lead to reduction of consumption products. Setting price policies for e-cigarettes, including taxation policies will cut use of new tobacco products,’ says Franciscah Marabu, NTA Programme Manager.

According to the Ministry of Health, an estimated 2.5 million Kenyans are tobacco smokers, with tobacco being the leading preventable cause of death claiming the lives of at least 9,000 Kenyans annually.

She adds, “Use of e-cigarettes is increasing rapidly among the young people. The e-cigarettes are perceived to be less harmful by the users, they attractive and come in different flavours. Significant increases in tobacco taxes that increase tobacco product prices encourage current tobacco users to stop using, prevent potential users from taking up tobacco use, and reduce consumption among those that continue to use, with the greatest impact on the young and the poor.”

The World Health Organization (WHO) said e-cigarettes contain harmful substances to both user and non-uses given that their emissions have nicotine and other toxic substances.

“Evidence reveals that these products are harmful to health and are not safe. However, it is too early to provide a clear answer on the long-term impact of using them or being exposed to them,” said WHO.

While the stricter tax regime is backed to discourage tobacco use, the National Treasury has been faulted over its delay to operationalize Tobacco Control Fund since its gazettement in 2014 through the Tobacco Control Regulations of 2014.

According to the regulations, tobacco manufacturers and importers are required to remit a solatium compensatory contribution at the rate of 2% of the value of the tobacco products annually.

Marabu says the fund is meant to assist the government in paying for the health burdens of tobacco use.

“Nothing hinders the National Treasury from implementing the fund. The fund is supposed to provide resources to undertake research, documentation, and dissemination of information on tobacco and tobacco products and promote national cessation and rehabilitation programmes.”

NTA calls for immediate operationalization of the fund since the Supreme Court in 2019 upheld the finding that provisions implementing article 5.3 of the WHO Framework Convention on Tobacco Control did not discriminate against tobacco companies.

  

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