British American Tobacco (BAT) Zambia has called on the government to reconsider a proposed 66% increase in excise duty on cigarettes.
The tax hike is scheduled for parliamentary discussion following the recent announcement of a supplementary budget aimed at raising K33.6 billion.
The proposal would raise cigarette excise duty from K452 to K750 per mille, marking a record increase for the sector.
BAT Zambia Managing Director Mukubesa Maliande noted that aggressive tax increases have historically triggered a surge in illicit trade.
He revealed that internal estimates indicate that the illicit cigarette market in Zambia nearly doubled from 12% in 2024 to around 23.8%, following a previous excise hike earlier this year.
Mr Maliande also cited the Ministry of Finance figures estimating annual government revenue losses from illicit cigarette sales at around USD50 million.
He emphasised that current excise levels, which already saw a 13% increase in January, are adequate to meet revenue goals while supporting legitimate businesses and jobs.
Mr Maliande warned that further mid year hikes could lead to unintended consequences, including increased illicit trade and financial strain on consumers facing high inflation. This further defeats the Government’s intention of the excise and public health policy.
He advocated for a more progressive and predictable fiscal approach, urging a focus on regulatory enforcement and tax compliance to curb revenue leakages.
Mr Maliande observed that the measures, rather than steep tax increases, would better support the government’s economic goals and protect both industry and consumers.
