On 1st October 2021, the Kenya Revenue Authority (KRA) through a press release that was posted on its website (,-honour-compliant-taxpayers) notified the public that they are set to appreciate, honour compliant taxpayers. This is indeed a welcome move considering the steps that have been made by the fiscal authority and the support that they have received from stakeholders’ key among the public that has paid their dues to the government to facilitate its delivery services. 

KRA deserves to the commended for its efforts to mobilize the much-needed resources and in the current, they managed to meet and surpass the Financial Year 2020/21 revenue target after eight (8) years waiting. Even with challenges faced in the slowdown in the economy occasioned by several vectors among them the global pandemic, the authority collected Kshs. 1.669.2 Trillion against a target of Kshs. 1.652.4 Trillion. This represents a % increase from the target. They should keep up with this trajectory and the government should accord it all the support it needs. 

Excise tax is one of the categories that contribute to the national purse. It is a tax that is levied on products and services that the government wants to discourage its consumption because of negative externalities associated with their use. It is an indirect tax on the sale of a particular good or service such as fuel, tobacco, and alcohol. Indirect means the tax is not directly paid by an individual consumer — instead, the Tax Agency levies the tax on the producer or merchant, who passes it onto the consumer by including it in the product’s price.

In 2015, while submitting the Budget Statement to the National Assembly, the then Cabinet Secretary informed the house that the National Treasury was going to table a simple and modern standalone Excise Bill. The development of the legislation had incorporated International best practices i.e., upon approval, the Act will be imposing excise duty to compensate for harmful effects caused by production, supply, consumption, or use of goods and services, which costs are not directly reflected in their prices. The proposed law imposed a charge on (i) sticks of harmful cigarettes and tobacco; (ii) volumes of harmful alcoholic beverage and sugar-sweetened beverage consumed; (iii) volume of polluting fossil fuels and age of motor vehicles purchased; and (iv) weight of environmentally damaging plastic bags.

On tobacco, the government got it right and data on tax collection illustrated that this was a move in the right direction. Providing for indexation of taxes was also a welcome move as it ensured that the Tax Agency does not lose in the real value of taxes because dependence on nominal taxes can mislead because inflation overtime can erode value. Kenya was thus an icon as far as tobacco taxes were concerned and it received accolades and commendation from these moves since the complied with Article 6 of the provisions of the WHO Framework Convention on Tobacco Control and its guidelines. 

Unfortunately, the National Treasury steered off this right path in 2017 and amended the Excise Act. The focus was on the industry instead of the tax. The situation was remedied in 2019 since Excise revenue has declined from approximately 3% of GDP in 2003/04 to about 2% in 2017/18 and to address this decline and to boost excise revenues, the CS proposed to increase the rates of excise duty on cigarettes, wines, and spirit by 15%. The law provides for an annual inflation adjustment for excisable goods that have a specific rate. The adjustment was done in 2018 and the rates of excise duty on these goods were increased by 5.2%.  There is an ongoing debate as to whether there should be an adjustment considering the prevailing economic conditions. 

We should bear in mind that tobacco use and exposure is the leading cause of preventable death. It causes more than 7 million deaths per year globally, and if the pattern is not reversed, more than 8 million people a year will die from diseases related to tobacco use by 2030. Increasing the excise tax on tobacco products is an effective way of reducing tobacco consumption. The evidence demonstrates that Tobacco Taxes have yielded two outcomes i.e., Reduced Tobacco Consumption (Public Health Win) and Increased Government Revenue (Fiscal Win). The poor and young people are the two population groups that bear the burden due to their higher consumption patterns, and they are price sensitive.  

There are concerns that tobacco taxes are regressive; however, the arguments fail to account for the tobacco-related disease burdens and the associated costs. Excise can be avoided by consumers if they don’t consume the products that fall under it. Excise (and countries that levy VAT) are being deployed as tools to reduce consumption of tobacco products and thus mitigate against the negative externalities associated with the use of the product. Here, the tools are helping advance the public good. Excise tax is imposed on products that governments want to discourage consumption and tobacco are among such products.

The government has a responsibility of protecting the populace from the effects of harmful products.  NTA is opposed to the use of VAT on basic commodities which are consumed by many and more so the low-income earners since it contributes to worsening inequalities with the poor and paying more. Excise and VAT on tobacco and tobacco products will serve to reduce consumption and promote positive health outcomes in the medium to long term in developing countries. 

In April 2001, African Union countries pledged to set a target of allocating at least 15% of their annual budget to improve the health sector. Tobacco tax presents a policy option to realize this goal and there will be policy coherence where revenue raised from tobacco products are used to support public health particularly health promotion; quitting and cessation programmes. 

NTA’s public position opposing VAT because its regressive nature was not a blanket opposition of VAT levied on all goods. It is VAT on essential/basic goods. The use of Excise & VAT on tobacco are consistent with WHY TAX MATTERS…. i.e., RE-PRICING (discouraging the consumption of public bads). 

So as KRA gears towards honouring and appreciating all taxpayers for their invaluable contribution to the government’s revenue collection efforts that enabled Authority to meet the target, it should be clear that the real taxpayer on the excise category is the smoker and not the tobacco manufacturer. They can only celebrate them under the corporate category since they are remitting taxes. We should not lose focus on the very fact that a wrong award given to a manufacturer of a product, which when consumed as prescribed will result in disease, disability, and death should be discouraged. 

Article 5.3 of the Framework Convention on Tobacco Control (FCTC) stipulates that “In setting and implementing their public health policies with respect to tobacco control, Parties shall act to protect these policies from commercial and other vested interests of the tobacco industry in accordance with national law.”. This is because there is an irreconcilable conflict between the two. For the industry to remain profitable, there will be a need for more consumption of their products. 

As an individual who has monitored the work of the industry and worked to support tobacco control efforts at the national, regional, and global level, it is not lost to me that if KRA doesn’t consider all the facts, an Award is given blindly facilitates the normalization of the industry and people who may not appreciate that the just as the Mosquito is the vector in Malaria Control; so is the Tobacco Industry when it comes to tobacco control. The Award will strengthen industrial relations and provide a platform for stakeholder marketing which is prohibited from looking at the letter and spirit of national law.  

A recent study conducted by CTCA (2017) in partnership with other organizations, unmasks the strategies that have been deployed by the tobacco industry to delay, dilute and defeat domestic tobacco control measures. In 1994, the Attorney Generals of 4 states in the US filed lawsuits against tobacco companies for reimbursement of health care expenditures arising from tobacco-related illnesses. As part of the settlement, tobacco companies globally were required to make public millions of corporate documents which can now be accessed on the Truth Tobacco Industry Documents Library they include marketing strategies, letters, faxes, memos, research reports, etc. 

One of the incidents captured in the documents that relate to BAT is its involvement in tobacco tax policies in Kenya shows a clear attempt to endear itself to political powers of the time with the objective of benefiting from tax waivers. BAT set up ‘Imara Daima’ (Swahili word for ‘strong forever’) Housing project and in its letters “the project occurs at a time when it particularly important for BAT Kenya to be seen to be good citizens. Negotiation with the government on changing the excise structure commenced and BAT Kenya is trying to get leaf growing to be gazetted for their exclusive development. Failure to undertake the project would have an unfavorable effect on government and staff relations”. There are several other documents that clearly demonstrate industry interference in policymaking and unfortunately, there is evidence to show that they have been successful. 

Whereas KRA cannot be condemned for its initiative to celebrate taxpayers and practices; it is important that such initiatives give the complete narrative. They should not be abused particularly by providing the tobacco industry a forum for them to normalize the industry which unfortunately masks the impact of the products that they produce.

In the past, when they have been awarded, they put up newspaper adverts in the leading dailies unsuspecting public may not get the full narrative. It is imperative upon KRA and others that are engaged in similar initiatives to appreciate that the tobacco industry should be handled with the appreciation of the impact of its work. 

The Ministry of Health should take lead in sensitizing other government agencies on the provisions of the guidelines that were approved by parties to the FCTC for effective implementation of Article 5.3 of the FCTC. They should work in partnership with CSOs working on tobacco control should increase awareness of the guidelines. 


Vincent Kimosop

Policy & Governance Expert