Caxton Ngeywo, Head of the Market Surveillance Office, Kenya Revenue Authority (KRA)

1. TAXATION OF
TOBACCOpolicy questions

2. DEALT WITH?
➤ can increases in tax rates on tobacco lead to increased
revenue?
➤ can tax be used as an effective measure to reduce tobacco
consumption?
➤ what are the preferred tax structures? Ad valorem, specific,
hybrid?

3. WHAT WOULD BE THE IMPACT OF INCREASED RATES ON
INVESTMENTS IN TOBACCO INDUSTRY?
➤ increase in tax and price is one of the measures aimed at
reducing tobacco consumption (Article 6 WHO FCTC)
➤ so may be the question should be; what is the impact of
implementing WHO FCTC?
➤ objective of WHO FCTC : save lives through reduced tobacco
consumption?
➤ Article 17 - WHO FCTC recommends Provision of support for
economically viable alternative activities
➤ what then would be the tipping point? at what point would the
industry divest? Elasticity and other factors will affect the
decision.

4. WILL INTRODUCTION OF TAX OR INCREASE IN
TAXES LEAD TO ILLICIT TRADE?
➤ Alternative question - Does a high tax rate lead to illicit
trade?
➤ studies indicate that countries with high tax rates on
tobacco doesn’t necessarily have higher illicit trade levels
➤ other factors lead to illicit trade including Corruption, lack
of controls, weak administration (skills, personnel,
resources), complex tax structures.

6. “Type a quote here.
-Johnny Appleseed

9. WHAT ARE THE AVAILABLE MEASURES
AGAINST ILLICIT TRADE
➤ Protocol to elimination illicit trade in tobacco products
recommends following measures on illicit trade
➤ 1. Supply Chain Controls
➤ Licensing
➤ Due Diligence
➤ Track and Trace Systems
➤ Record Keeping
➤ Security and Preventive measures

10. WHAT ARE THE AVAILABLE MEASURES
AGAINST ILLICIT TRADE?
➤ 2. recommends offences
➤ unlawful conduct including criminal offences
➤ liability of legal persons
➤ prosecutions and sanctions
➤ seizure payments
➤ disposal or destruction
➤ special investigative techniques 3. enhances international
cooperation

11. WHAT ARE THE AVAILABLE MEASURES
AGAINST ILLICIT TRADE?
➤ 3. International Cooperation
➤ General Information Sharing
➤ Enforcement Information Sharing
➤ Enforcement cooperation
➤ mutual administrative assistance

12. CAN THESE MEASURES BE
IMPLEMENTED?
➤ Yes
➤ Kenya has implemented substantially (Excisable Goods
Management System, Electronic Cargo Tracking, Licensing
etc)
➤ EU, Uganda, Tanzania, South Africa have commenced
processes to implement the Track and Trace measures
against illicit trade.

13. WHAT TO WATCH OUT IN COMING UP
WITH POLICY?
➤ tobacco industry interference (the illicit trade narrative and the
partnership offers)
➤ apply article 5.3 of the WHO FCTC in dealing with the industry.
➤ lack of data or mechanisms to determine appropriate type of
tax or rate (WHO FCTC Secretariat can offer help)

14. “Thank You
Caxton Masudi Ngeywo