Imposing punitive sin taxes does more harm than good

For the past five years or so, I have been trying to give up a few vices that I cultivated when I was a lot younger, without much success. When I started to smoke cigarettes at the tail-end of my teenage, it was the cool thing to do. It was hip. Bell-bottom trousers, platform shoes and soul music were in fashion. I even attended a couple of boogie sessions, although dancing was never my thing. When you are born with two left feet, you do not display your jerky moves to others in broad daylight; you do it alone in the sitting room, when the parents are not around.

ADDICTION

Anyway, although I don’t intend this to be a confessional, I should have known better when I was advised by my elders that tobacco use was bad for my health and I should give it up before I was hooked. However, as a sagacious thinker once pointed out, you cannot teach young people anything, for they know everything already. Such hubris usually leads to disaster, and so I didn’t stop, even when it led to severe punishment. After all, stolen pleasure is the best kind. Now I am paying the price for my adolescent arrogance.

The same thing goes for alcohol. Many people start drinking while young mostly because of peer pressure and the need to belong. Luckily, not everyone becomes an alcoholic, but those who do are completely wasted. Indeed, addiction to alcohol is regarded more seriously by society than any other vice, probably because a tobacco addict only destroys his health and most likely his own life, while an alcoholic destroys everything that he should hold dear— his health, family, finances, thinking faculties, and the ability to interact with the rest of society with a modicum of civility and, yes, sobriety. There is nothing good about tobacco addiction or excessive inebriation.

EMPLOYER

Indeed, the only positive thing one can say is that the tobacco industry generates jobs, benefiting tobacco growers, those who roll cigarettes, and those who peddle them, while the multinational that produces the brews that keep us happy for short periods and broke for longer periods is also a major employer. Those who produce barley, hops and malt cannot really complain. Nor can those employed to brew beer and stock spirits, wholesalers, distributors, bar-owners, and those whose nightly occupation is to make people drunk and keep them that way. These jobs keep body and soul together.

The other thing that one can say about cigarette-makers and alcohol brewers is that they are among the most highly taxed in the republic. They pay a great deal of money to the government so that it can stay afloat. Which makes what I have to say next rather contradictory: I have a sneaking sympathy for these two corporate behemoths that feed on our vices and make super-profits, not because they ever forced anyone to indulge in their products, but because the government has made a habit of turning to them every time there is a hole in its revenues. In the end, it is the consumer who feels the pinch.

COUNTERFEITS

I have a feeling that whatever proposal I come up with won’t be very popular with many Kenyans, especially women. Nevertheless, economists have repeatedly warned about the iniquities of relying on sin tax to close budget deficits merely because imposing such a tax on consumers is the easiest thing in the world. After all, some people regard sin tax as a moral issue. Indeed, were they to be asked, an ordinary beer would sell for Sh1,000 while a bottle of whiskey, brandy, gin or wine would cost five times as much. That way, they reason, few people can afford alcohol, and all will be well with the world.

Nothing could be further from the truth. One of two things will happen. Either the drinker, if he is the family provider, will expend all the money he earns on drink and deny the family the necessities of life, or he will resort to cheaper, illicit concoctions to satisfy his craving. Neither is a good alternative. A similar thing has happened with cigarettes. These days, it is difficult to find a genuine product of the popular brands anywhere except in well-stocked bars. The number of counterfeits in supply is amazing and nobody seems to worry too much about the situation. But that’s besides the point.

21 PER CENT

If a proposal in the amended Finance Bill 2019 goes through, excise duty on alcoholic beverages and cigarettes will soon go up by a whopping 21 per cent. Parliament has already passed the Bill, which only awaits presidential assent. This will have a major negative social impact, and there is no evidence that such a tax will net more revenue in the long run. The most likely outcome is that cigarette and alcohol smugglers will have a field day making a killing while consumers will divert more of their meagre earnings to expensive alcohol or resort to kumi kumi. What they can’t do is to pour into the streets in protest, and the government knows it.

Mr Ngwiri is a consultant editor; [email protected]