Tobacco Taxation in Kenya
Tobacco is a leading cause of preventable death globally. World Health Organization (WHO) estimates that there will be a death toll of 10 million per year.
County governments have a role to play in production of tobacco. Agriculture is a devolved function. Tobacco is identified as one of the major cash crops in counties such as Migori and Busia. In 2014, it was estimated that 3.1 million kilograms or 41% of national production of tobacco were produced in Western Kenya.
Nairobi County Tobacco Bill though condemned by critics as an “Evil way of raising revenue”. The Nairobi County government is seeking to use this legislation to introduce licenses for all stakeholders in the tobacco business.
Many governments across the world prefer levying taxes on cigarettes and alcohol because of their inelastic demand. What does this mean? This means that 1% change in price of cigarettes leads to less than 1% change in quantity demanded. When additional taxes are levied on cigarettes, the demand for the product is not affected so much. Smokers have to puff it away because they have formed an habit of smoking and I’m told their is a craving which must be satisfied.