On 13th June 2008, the Finance Ministers of Uganda, Kenya and Tanzania simultaneously read their 2008/ 2009 budget speeches to their respective nations. There was one striking similarity in the three budgets- each of the three East African countries proposed to increase excise duties on cigarettes.
Source: The blog of Jackie Tumwine
Uganda’s proposed increase in excise duty on cigarettes is set to generate an additional 2.1 billion Uganda shillings (1.3million US dollars) in revenue.
In Kenya, excise duty rates were increased on all categories of cigarettes. There was an average increase of Ksh 7 per cigarette packet. The Kenyan Government is set to collect an additional KShs 1 billion from this increase in excise duty on cigarettes. The Kenyan Finance Minister also proposed a new hybrid cigarette excise regime.
Tanzania also increased excise duty rates on cigarettes. Cigarettes with filter tip and containing domestic tobacco exceeding 75% had their excise duty rate increased from Shillings 11,266 to Shillings 12,618 per mil. The cigarettes without filter tip and containing domestic tobacco exceeding 75% had their excise duty rate increased from Shillings 4,775 to Shs. 5,348 per mil.
Kenya, Tanzania and Uganda’s proposed increases in cigarette excise duty rates, if properly monitored, will translate into more revenues for the respective governments and better health for the people as consumption rates of the deadly tobacco products will fall.
In addition to an eventual harmonized tobacco tax regime (which the 3 countries should seriously consider), Kenya, Tanzania and Uganda can also collectively strengthen regional and national tobacco control efforts through implementing comprehensive bans on cross border tobacco advertising, promotion and sponsorship, as well as regional cooperation in combating illicit trade in tobacco products.
These tobacco control measures and many others are proposed in the WHO Framework Convention on Tobacco control, a treaty all 3 East African countries have ratified and are thus bound by its provisions.
Below are excerpts from the respective budgets of Kenya, Uganda and Tanzania showing excise duty rates on cigarettes :
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UGANDA
115. Mr. Speaker sir, I am proposing to raise the excise duty on cigarettes in order to raise revenue. The proposed adjustments will raise 2.1 billion. The details are contained in the Excise Tariff (Amendment) Bill.
Excerpt from Uganda 2008/ 2009 Budget speech read by Hon Ezra Suruma, Min of Finance, Planning and Economic Development, 12 June 2008, Uganda.
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KENYA
133. Mr. Speaker, last year I proposed changes to our cigarette excise regime from Retailing Selling Price (RSP- based) to product characteristics in order to bring into the tax net imported cigarettes. In view of the current inflationary pressures, the RSP- based regime restricts free adjustments of prices. In order to address challenges associated with imported cigarettes and to move the current price-based practice to one based on product characteristics practice, I propose to introduce a hybrid of RSP-based and characteristics based regime for cigarettes. This will enable the industry players to make the necessary adjustments to eventually move to the characteristic based regime
134. In addition Mr. Speaker, in support of the priority programs we plan to implement, I propose to allow cigarette smokers to be proud Kenyans by making additional token contribution, averaging only KShs 7 per packet toward development. In this regard, the new rates applicable for categories A, B, C and D will be KShs700, KShs1,200, KShs1,500 and KShs 2,500 per mille, respectively. Mr. Speaker, I expect to collect an KShs 1 billion from this adjustment.
Excerpt from Kenya 2008/ 2009 Budget speech read by Hon Amos Kimunya, Min of Finance, 12 June 2008, Kenya.
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TANZANIA
(v)The Excise Duty rates on cigarettes are as follows:-
(a) Cigarettes without filter tip and containing domestic
tobacco exceeding 75% from Shillings 4,775 to Shs.
5,348 per mil;
(b) Cigarettes with filter tip and containing domestic
tobacco exceeding 75% from Shillings 11,266 to
Shillings 12,618 per mil;
(c) Other cigarettes not mentioned in (a) and (b) from
Shillings 20,460 to Shillings 22,915 per mil;
(d) Cut rag or cut filler from Shillings 10,333 per kilogram
to Shillings 11,573 per kilogram; and
(e)The excise duty rate on “cigars” remains at 30 percent.
Excerpt from Tanzania 2008/ 2009 Budget speech read by Hon Mustafa Haidi Mkulo, Min of finance and Economic Affairs, 12 June 2008, Tanzania.
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