Thursday, May 15, 2014
Uganda's low tobacco tax rates make cigarettes affordable to young people
On 31st May, Uganda will join the world in commemorating the World No Tobacco Day. The World Health Organization (WHO) has chosen the increase on tobacco taxes as this year's theme. Uganda has the lowest taxes on Tobacco products in East Africa. Only Tanzania has lower excise duty on cigarettes. The effect of low taxes on tobacco products translates to low prices of cigarettes which makes smoking a very affordable pastime in Uganda. Sticks of cigarettes cost only a few hundred shillings that even primary school children can afford to buy at the nearest stall. You see in Uganda, it is not illegal to sell cigarettes to minors. A six-year old boy can buy a cigarette at the nearest stall. Which is why we all have to urge parliament to pass The Uganda tobacco control bill (2014)to make it illegal to sell tobacco to minors in Uganda. Under Kenyan law, it is illegal to do so and has been the case since 2007 when Kenya passed a tobacco control law. Because of stringent tobacco control policy in the developed world, governments have hiked tobacco taxes and made cigarettes less affordable,especially to younger people who are more price sensitive. Why should this worry the average Ugandan? Well, we now know that tobacco products kill half of all their users. Lets re-state that again. When used exactly as intended by the manufacturer, tobacco products kill half of all their users. The WHO reports that 71% of lung cancer deaths globally were due to using tobacco products. WHO's tax economist, Koffi Nti, has observed that cigarette prices in Uganda haven't changed in the last five years. This is mainly because Uganda's taxes on tobacco products have remained constant despite annual inflation. The implication is that cigarettes have actually been becoming cheaper for young people over the last five years because of constant tax rate that is not responsive to inflation. Koffi Nti also notes that that revenue contribution from tobacco products to total government revenue and total excise revenue has been falling. He cites an example of tobacco tax contribution to the total government tax revenue which has dropped from a peak of 5.3% in the fiscal year 1993/94 to only 0.9% in 2010/11, while the contribution to excise tax revenue has reduced from 49.5% to 14% during the same period. According to the Center for Tobacco Control in Africa(CTCA),Uganda’s tobacco tax rate currently stands at 37% of the average retail price, as compared to neighboring Kenya which is at 50%, and the WHO Framework Convention on Tobacco Control recommended rate of 70% of the retail price of cigarettes.