BAT Kenya $28M Tax Gap Fuels Health Crisis, Demands Urgent Action

By Melisa Mong'ina

Tobacco smoking is a risk factor for several diseases, including chronic respiratory diseases, cardiovascular diseases, various cancers, and diabetes. These tobacco-related diseases pose significant economic costs to Kenya's healthcare systems. Every year, thousands of Kenyan families lose loved ones to cancer due to tobacco use and the inability to afford medication.

According to Tobacco Control Data Initiative (TCDI) 2022, 46% of Kenyan patients undergoing treatment for chronic respiratory disease, cardiovascular disease, diabetes mellitus, malignant cancers, and tuberculosis, had a history of tobacco use. 

As healthcare system costs increase, corporations like British American Tobacco (BAT) Kenya continue to evade taxes meant to support public health, resulting in a high mortality rate in the Country. 

To address this major crisis, the National Taxpayers Authority (NTA) in collaboration with key stakeholders, has uncovered a shocking tax disparity of $28 million linked to BAT Kenya. 

According to Ms. Irene Otieno, National Coordinator at NTA, BAT Kenya has not been following proper tax procedures, despite being recognized as the leading taxpayer in Kenya. 

Ms. Irene Otieno, National Coordinator at NTA/ NTA

“There's a staggering 28 million USD tax discrepancy in the reports of BAT Kenya. As we are all aware, BAT has received several awards in Kenya as a leading taxpayer and this points to the fact that BAT has not been doing its business right,” stated Ms. Otieno.

She highlights that there is a broader dissatisfaction with Kenya’s health systems, especially the Social Health Fund, which is seen as inadequate for addressing critical health issues like cancers, stressing the need for more taxes on products that contribute to such diseases and a call for urgent action from the Kenya Revenue Authority (KRA).

“The government has been very slow to respond to these issues. This report shows that this amount of money can address a lot of shortfalls in Kenya's health budget. We are aware that cancer is a national problem in the country and the package is not well thought of. We need to tax products that deepen these diseases in our country. Therefore, we ask for quick action from the KRA,” said Ms. Otieno.

In response to this issue, KRA has issued a statement acknowledging the allegations and has assured that appropriate action will be taken if any tax evasion is confirmed. 

Ms. Otieno criticizes KRA for its slow and inadequate response to the findings of the report, stating that its response does not give them any assurance and that they should use the same energy they often use in pushing taxpayers to look at the corporate entities.

“We saw the reports and the statement from the Kenya Revenue Authority in response to this report. And we feel that their response does not give us any confidence at all. The KRA that has been pushing taxpayers to carry more tax burden should carry the same energy when they are looking at the corporate entities,” she added.

Thomi John, Policy Officer for Tax and Equity at Tax Justice Network Africa, underscores the need to expand advocacy efforts beyond tobacco control advocates. They aim to involve different sectors, including government agencies, media, and religious organizations, in the push for greater accountability.

“We have discussed and agreed that we are going to broaden our advocacy. It's no longer going to be a tobacco control advocates affair, and that's why we opened this discussion to government officers from different government agencies, media, non-traditional advocates in the tobacco space, and also the religious organizations,” said Thomi.

Benda Kithaka, Founder and Executive Director at Kilele Health urges the media to play an active role in raising public awareness and holding the government accountable noting that the media has the power to expose corporate malpractices and to educate the public, especially the younger generation, about harmful products like tobacco. 

“As the media, you hold the biggest tool to be able to reach the communities for public outcry. Right now, every other day, we are covering stories that are disheartening because the health system cannot address the issue of health financing and safeguard the people's health,” she urged. 

Adding “You also are known for investigative journalism, where you give both sides of the coin and a balanced view, which is why we believe in you when it comes to reading, hearing, and acting on news.”