Experts welcome move to tax nicotine pouches – KBC

Kenya will for the first-time tax the highly addictive nicotine pouches, in line  with recommendations by the World Bank Group and the World Health  Organisation.  

In the budget statement on June 10, 2021, Cabinet Secretary for National Treasury Ukur Yatani noted that innovations in the  tobacco industry have led to the introduction of new nicotine delivery products,  such as Lyft.

Yatani said: “These new products do not fall in the classification of tobacco  products existing in the Excise Duty Act and are therefore currently not subject  to taxation.”

“In this regard, I propose to introduce excise duty on products containing  nicotine or nicotine substitutes at a specific rate of Ksh 5.0 per gram. This rate  of excise duty is equivalent to the duty applicable to similar products under  the Act,” he added.

Health and legal experts working in tobacco control and legislation have  praised this move to tax nicotine pouches.

According to the World Bank Group’s publication, E-Cigarettes: Use And  Taxation (2019), regulating new nicotine delivery products using excise  taxation and restrictions on access and sale is a widely-accepted policy action  to prevent their harmful health effects.

Advocate under the Kenya Tobacco Control Alliance (KETCA) said the  taxation was long overdue.

“It is a positive move given that the British American Tobacco (Kenya) was  already fighting for tax relief on their nicotine pouches,” said KETCA national  chairman Mr Joel Gitali.

In September 2020, former BAT East Africa managing director Beverley  Spencer-Obatoyinbo said they had opened talks with the Treasury and the  Kenya Revenue Authority (KRA) to have the pouches, initially exempted from excise duty for two to three years, and subsequently attract  lower taxation than prevailing rates on cigarettes.

“My expectation is that there would be no exercise in this category due to the  size of foreign direct investment. We are looking at a holiday of two-three years  in order to start the manufacturing, distribution and sales of this category, and  also give us a chance to establish exports,” Spencer-Obatoyinbo had said.

On Thursday, Gitali praised the government for rejecting this ill-timed proposal.

“That was very deceptive because the company was running away from its  responsibility by seeking tax exemptions. We thank the government for listening  to tobacco control advocates, who have been advocating for strict  regulation and taxation of nicotine pouches. We have started on a good note and now we are looking forward to the taxes going higher. All these harmful  and addictive products must be taxed accordingly,” Gitali said.

The World Health Organization (WHO) and the Secretariat of the Framework  Convention on Tobacco Control (FCTC) have been clear in recommending  that countries treat and regulate e-cigarettes and nicotine delivery products  no differently than other tobacco products.

The International Institute for Legislative Affairs, a Nairobi-based legal thinktank  that works closely with Parliament to develop laws, also praised the decision to  tax nicotine pouches.

“We now appeal to Parliament to adopt the proposal, which has been  included in the Finance Bill 2021. The Bill should be passed with this proposal  intact,” said IILA Chief Executive Officer Celine Awuor.

“It is a good move to have taxes on nicotine products. We also ask that the  taxes on all nicotine products to be equally high to prevent switching and dual  use,” Ms Awuor said.

Celine noted if taxes of some products are lower, addicted users might seek to  satisfy their addiction with alternatives rather than quitting.

KETCA National Coordinator Thomas Lindi said imposition of excise duty is  evidence the products are harmful.

“Excise taxes are commonly employed to discourage certain harmful  behaviors. They do this by decreasing both supply and demand for a product  via price increases. We now ask the Ministry of Health to move in strongly and  regulate this harmful product,” Lindi said.

He noted there is no evidence nicotine pouches are a safer alternative to  smoking or help smokers to quit. They are also not approved by the Pharmacy  and Poisons Board as a nicotine-replacement therapy.

Smokers who want to quit should seek medical help and will receive medically  approved nicotine replacement therapy, for free in public hospitals, because  it is covered by the National Hospital Insurance Fund.

According to the WHO’s Global Nicotine Reduction Strategy, nicotine exposure can harm brain development in ways that may affect the  neurological development and mental health of children and adolescents. The harm is permanent.

“Early exposure to nicotine (i.e. before or during adolescence) is associated  with more severe dependence, greater reward and increased self administration, suggesting that the developing brain may be more susceptible  to permanent changes caused by nicotine that support addiction,” the WHO’s  Global Nicotine Reduction Strategy notes.