British American Tobacco Raises Cigarette Prices in Kenya
British American Tobacco has raised cigarette prices in Kenya after higher excise taxes took effect, warning that steeper taxes could make locally made cigarettes less competitive against smuggled products.
In November last year, the "2019 Financial Law" raised the consumption tax on cigarettes by 14.1%. The tax on filtered cigarettes increased from 2,765 shillings per thousand to 3,157 shillings, while the tax on unfiltered cigarettes rose from 990 shillings per thousand to 2,272 shillings.<\/span><\/div>
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British American Tobacco stated that the higher taxes have made locally manufactured cigarettes in Kenya more expensive, exacerbating the smuggling of cheaper products from neighboring countries. The tobacco company remarked: "These new prices are largely driven by the enactment of the 2019 Financial Law, which further increases the consumption tax gap on tobacco products between Kenya and Uganda."<\/span><\/div>
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Big Tobacco's Tactics<\/span><\/div>
Meanwhile, a recent analysis in New Zealand has shown that local tobacco companies have been leveraging annual tax increases to offset significant voluntary price hikes.<\/span><\/div>
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Professor Richard Edwards, a scholar at the University of Otago and co-director of the ASPIRE 2025 project, pointed out the common practices of global tobacco companies.<\/span><\/div>
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"The industry tends to portray itself as fighting against tax increases to help smokers, when it is clear that they often use these increases to justify price hikes, blaming the government for the responsibility."<\/span><\/div>
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Despite the regular tax increase of about $1.70 per pack of cigarettes each year, tobacco companies have raised their revenue by $1.<\/span><\/div>
"In this price, the tax for tobacco companies is $7.86, and the tax is $5.60." By March 2019, the average price soared to $37.48. In this price, the government collected $23.12. But the most striking change is that the average revenue per pack for tobacco companies has nearly tripled to $14.36."<\/span><\/div>
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The professor explained that these voluntary price hikes have gone unnoticed. Regular tax increases raise the average price of a pack of cigarettes by about $1.70 each year, while tobacco companies simply pocket an additional $1.<\/span><\/div>
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From the Business Daily<\/span><\/div>
