When most people in Kenya hear the words excise duty, the first thought is usually alcohol or cigarettes. And for a long time, that was true. Excise duty has traditionally been used as a way to make people think twice before indulging in “vices” like drinking or smoking. This is why it is often nicknamed the “sin tax.” But in today’s Kenya, excise duty has grown far beyond discouraging bad habits; it now touches everyday life, from the M-Pesa transaction you make to the data bundles you buy.

What Exactly Is Excise Duty?
Excise duty is a tax charged on specific goods and services, either produced locally or imported into Kenya. Unlike VAT (Value Added Tax), which applies broadly, excise duty is selective. It targets particular products such as alcohol, tobacco, sugar, fuel, cosmetics, airtime, and even financial transactions.

The Kenya Revenue Authority describes it as a tool that can both raise money for the government and discourage harmful consumption. That is where the “sin tax” label comes from: the idea that by making harmful goods more expensive, people will use them less, while the government raises revenue to deal with the negative effects those goods cause.

A Brief History of Excise Duty in Kenya
Kenya’s experience with excise duty has evolved. In the early 1990s, reforms simplified the system by consolidating cigarette taxes into fewer bands. This was followed by the amendment to the Tobacco Control Act in 2007, which required the Minister in charge of Finance to adopt taxation policies that contributed to reducing tobacco use.

Later, between 2007 and 2015, Kenya had a tiered tax system, where the rates were based on the physical characteristics of cigarettes as well as their retail selling price. This shift made the system easier to administer and less vulnerable to manipulation.
Being part of the East African Community also influenced Kenya’s tax choices, since the country had to align some of its excise rates, particularly on products like alcohol, with regional standards. Over the years, the scope of excise duty expanded from alcohol, cigarettes, and petroleum to include bottled water, soft drinks, and even plastic bags.

From Alcohol and Cigarettes to Airtime and Mobile Money
For many years, excise duty lived up to its “sin tax” nickname because it mostly applied to alcohol, tobacco, and other products seen as luxuries. But today, its reach goes much further. Airtime, mobile data, M-Pesa transactions, and even digital advertising are now under the excise tax net.
These modern sectors have become some of the government’s most reliable revenue sources. By 2023, excise duty on financial services and airtime contributed over KSh 45 billion, nearly rivalling what alcohol and tobacco brought in. This shows just how much Kenya’s tax structure has shifted alongside changes in technology and everyday life.

The Usual Suspects: Alcohol, Tobacco, and Betting
Even though excise duty has widened, the classic “sin products” are still central. Alcohol is taxed per unit of pure alcohol, meaning stronger drinks attract higher taxes. Cigarettes and other tobacco products also carry heavy levies, and recently, liquid nicotine used in e-cigarettes was brought under excise duty too.

Betting, gaming, and lotteries are another major target. For years, Kenya has wrestled with the rapid growth of gambling, particularly among the youth. Excise duty on betting was raised to 15% in 2024, only to be cut back to 5% in 2025 after pressure from the industry and concerns about enforcement. Importantly, the point of taxation shifted and now, the tax is now charged when money moves from a mobile wallet into a betting account.

Going Beyond Health: Sugar, Cosmetics, and Advertising
Kenya has also extended excise duty to sugar and confectionery products, a move linked to rising concerns over lifestyle diseases like diabetes. Cosmetics, bottled water, and even plastic bags fall into the same category. These are not exactly sinful products, but they are taxable because they are seen as luxuries or as having negative social or environmental impacts.
Advertising has not been spared either. Promotions for alcohol, gambling, and even online platforms attract a 15% excise duty. This shows that the government is targeting not just the products themselves but also the industries that promote them.

Why the Term “Sin Tax” No Longer Tells the Full Story
While calling excise duty a “sin tax” makes sense for alcohol, tobacco, and betting, the term does not capture today’s reality in Kenya. Taxing airtime, mobile money, or internet data is not about curbing vices; it is about raising money. The modern scope of excise duty reflects a government that is casting its net wide to finance public services, not just to nudge social behaviour.
That said, the old logic still applies in some areas. Tobacco taxes, for example, are meant to reduce smoking rates and cover healthcare costs. Yet, Kenya’s real excise revenue from tobacco has dropped by nearly 40% in the past seven years when adjusted for inflation, even though tobacco continues to cause about 9,000 deaths annually. This raises questions about whether excise duty is keeping pace with public health goals.

Why This Matters to You
You might not always notice it, but excise duty is part of your everyday life. It is in the price of the alcohol you buy on a Friday evening, the airtime you top up, the M-Pesa transaction you make to pay rent, or even the bet you place during a football match. For some products, the goal is to protect public health or the environment. For others, it is simply to raise money for the government. Either way, the cost lands on you, the consumer.

Resources
Tobacco Control Act, 2007
Business Daily: Airtime, financial transaction levies dethrone ‘sin taxes’ as new KRA excise duty cash cow-<https://www.businessdailyafrica.com/bd/economy/airtime-tax-dethrone-sin-taxes-new-kra-excise-duty-cash-cow-4631624>-
Excise Duty Act, 2015
Business Daily: MPs hand gamblers big tax cut. -<https://www.businessdailyafrica.com/bd/economy/mps-hand-gamblers-big-tax-cut-5088306>-
EY Global Tax Alert: Kenya’s excise duty on confectionery products and chocolates is now in effect.
The Star: New year pain as fresh rounds of taxes kick in. -<https://www.standardmedia.co.ke/business/business/article/2001509260/new-year-pain-for-consumers-as-fresh-round-of-taxes-kick-in#google_vignette>-
The Star: World Bank: Why Kenya must raise tobacco taxes. -<https://www.the-star.co.ke/health/2025-06-10-raise-tobacco-taxes-now-world-bank-tells-kenya>-