Appraisal of Kenya's Excisable Goods Management System Using Interrupted Time Series Analysis : A Case of Cigarette Excise Revenues

The government of Kenya introduced the Excisable Goods Management System (EGMS) in November 2013, which is a form of Track and Trace Systems (TTSs) for excisable goods, including cigarettes. This study appraised the EGMS with a focus on its impact on cigarette excise revenues and control of related illicit trade in Kenya. Illicit trade in cigarettes pose significant health risks owing to increased access to tobacco products, besides contributing to loss of government revenues. The study utilised an Interrupted Time Series Analysis (ITSA) to assess impacts of the EGMS on monthly cigarette real excise revenues. The results indicate that the implementation of the EGMS contributed to an effect that occurred at a fixed point in time (or a pulse effect) and shows evidence of a positive effect on the post intervention trend of real excise revenues for cigarettes relative to its pre-intervention trend. A level change in revenues is however not supported by the results. With respect to illicit trade, a one-off jump in declared production of cigarettes in 2014 suggest waning levels of illicit cigarettes. It would be important that the EGMS is reviewed continuously for performance to deal with probable metamorphosis of tax evasion