British American Tobacco Kenya - Pricing and tax
In the past five years, BAT Kenya plc has contributed over KSh 80 billion to national revenue through various taxes (Excise Duty, Value Added Tax (VAT), Pay as You Earn(PAYE) and Corporation Tax).
Tobacco taxes provide a source of funds for many governments and can account for an important part of their revenue. To develop appropriate taxation policies, it is prudent that policy makers engage with industry players and consider impacts to customers and businesses.
However, while some smokers may choose to quit, or smoke less, large and sudden tax rises may not always result in reduced overall tobacco consumption. Hikes in excise tax may lead smokers to access the illegal market for cigarettes or lead to greater price differences between nearby countries, encouraging tobacco smuggling across borders.
A managed solution
A stable and predictable tax environment, which includes gradual and manageable tax increments, is the most sensible approach to tobacco taxation. This way, governments are less likely to inadvertently fuel illicit trade and tax revenues are more predictable.