Kenyans Paying World’s Highest Fees On Controversial Excise Stamps

Kenyan manufacturers are paying the WORLD’S HIGHEST fees for excise tax stamps – even before the controversial price increase proposed by the National Treasury kicks in. If the proposal by the Treasury comes to pass, the cost will go up by more than 300 percent.

The discredited stamps, which are meant to combat counterfeiting and smuggling, are up to 70 TIMES more expensive in Kenya than they are in Europe, where they offer the full track-and-trace capability. And now they want to set a new record where no other country will beat them.

Since the announcement that fees for tax stamps will increase by up to 317 percent on some excisable goods, it has been revealed that Treasury owes 4.5 billion shillings to Swiss company SICPA, which has manufactured Kenya’s stamps since being awarded a contract to run the Excisable Goods Management System (EGMS) over 10 years ago.

“The exorbitant fees that Kenyans are being charged for excise stamps make it imperative that KRA addresses transparency issues around the single-sourced and non-competitive procurement of SICPA,” said an entrepreneur who did not want to be named for fear of being victimized by KRA.

“It’s unacceptable that SICPA pockets several hundreds of times the commission from EGMS than the KRA itself receives. We are exporting our taxpayers’ funds with little or no return,” the angry entrepreneurs added.

In Europe, where stamps offer full track-and-trace capability, Sweden’s cigarette manufacturers pay the equivalent of Sh36 for a pack of 1,000 stamps. In the UK the price is Sh95, while in Turkey, which receives its stamps from SICPA, the price is 625 shillings.

In Kenya, the price is a breathtaking 2,800 shillings. That will rocket to 5,000 shillings if the new increase is enforced on March 1. “These fees are ultimately paid by Kenyan consumers, who will face higher prices that will exacerbate the soaring cost of living,” he added.

“The EGMS was meant to cut the level of illicit trade involving excisable goods. Unfortunately, our stamps offer no track-and-trace capability and illicit trade has spiraled so that one in five goods sold in Kenya is now counterfeit. The government is losing over Sh153 billion in tax revenue to illicit trade and paying through the nose for a system that fails to prevent it.

“We need an official audit into SICPA’s running of the EGMS. Currently, the only winners are cartels, not consumers or state coffers.”

Related Content: Resist The Ridiculous Excise Duty Spike

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