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Mar 21, 2023Liked by Mwango Capital

Good morning;

Allow me to highlight first that your recording is too fast and eats into the statements made by your speakers, at times difficult to decypher.

The narrative adopted by your speakers on the stamp price hike is not accurate: Excise taxes are as you said an important revenue mobiliser, yet the stamp hike is a storm in a teapot as the tax applied to the stamp is between 50 and 70 times the multiplier of its stamp physical price.

One thing is the price of the stamp, another (and greatly more relevant) is the tax applied.

Treasury in Kenya decided rather clumsily to further increase collection by increasing the stamp cost: they did not have legal framework for increasing the tax but were under pressure for increasing collection.

Of course taxpayers (KAM for all and EABL as one) did highglight it by bloating the narrative beyond its real economic impact. Just like looking at the single tree and not the forest.

Stamps were introduced 10 years back as panacea for fighting illicit, counterfeit and grey imports, it worked until unscrupulous Taxpayers found the way to fool the system with fake stamps from India and China.

If only enforcement was properly applied, this would be a limited matter.

Excise collection grew 20% on sin products in Kenya when seriously introduced in 2015 and the present KRA EGMS service provider banked on "show and tell" for winning excise compliance service provision in Uganda and Tanzania.

Not a single Revenue Authority has seriously studied consumer elasticity to excise, this should be the standard for application of the tax.

It is Treasury that sees this tax as far-reaching, immediate and applicable to fast moving consumer goods as a predictable revenue-assuring indirect tax.

A more backstage question to ask would be if SICPA EGMS in Kenya had really proven unsuccessful in its execution, why has the contract been quietly extended beyond its prescribed term in denial of public procurement laws?

Finally, maybe one should also start pondering why there is no African Service Provider on such activity: SICPA is Swiss, Authentix is US, Delarue UK, OPSEC UK, Inexto Swiss.

Happy to discuss more.

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