Reforming Excise Taxation on Alcohol Products in Kenya

This paper explores the excise taxation systems for alcohol products in Kenya, focusing on optimizing tax policy to enhance revenue generation and further mitigate negative externalities. Utilizing a proprietary elasticity estimation nuanced by a literature review to generate joint Laffer curves, we identify potential adjustments that could increase government revenue without causing significant market disruptions. Our findings suggest that there is a scope to raise taxes on alcohol products, which could not only boost fiscal income but also improve public health outcomes by discouraging excessive consumption. The paper proposes practical mechanisms that include a move to alcohol content-based excise system for taxation of alcoholic products in Kenya. The recommendations in the paper highlight the potential for excise taxes to contribute to economic growth and public welfare in Kenya while emphasizing the importance of stakeholder engagement and data-driven policy making.