By Albert Allotey
Accra, Jan. 11, GNA – A report on the Post-Assessment of Tobacco Taxation in Ghana 2024 has been disseminated to stakeholders to facilitate the implementation of the excise tax on tobacco in the country.
A post-assessment study was commissioned by the Vision for Alternative Development (VALD), with the support of Tax Justice Network Africa, to examine the impact of the Excise Duty Amendment Act 2023 (Act 1108), which implementation began in May 2023.
The new tax law aims to significantly increase tobacco prices, reduce consumption, and generate additional government revenue for public health initiatives.
The presentation of the report was made at a National Stakeholders Dissemination Meeting organised by the VALD.
It was attended by representatives of the Ministry of Health, the Ghana Revenue Authority (GRA), Food and Drugs Authority (FDA), WHO Country Office, and other civil society organisations.
Dr Michael Kofi Boachie, SAMRC/Wits Centre for Health Economics and Decision Science – PRICELESS: South Africa, presented the findings of the study at the meeting.
He said Ghana implemented an Excise Duty Amendment Act in 2023 to align tobacco taxation with the ECOWAS directive and international standards.
Dr Boachie said the new tax adopted the exact ad valorem rate (50%) in the ECOWAS directive, however, the specific tax was not pegged to the dollar and inflation.
As of May 2024, US$0.02 was equivalent to approximately GHS0.30.
“This means that Ghana may be charging a specific tax lower than the ECOWAS rate depending on exchange rate movements,” he stated, adding that; “Based on the exchange rate in May 2024 we estimate that Ghana is losing GHS0.02 on each cigarette consumed.”
Dr Boachie said the hybrid tobacco excise system increased revenue from GHS220,798,555 (May 2022 – April 2023) to GHS454,466,107 (May 2023 – April 2024), about 106 per cent growth in revenue even after granting tax waivers on tobacco products from within the ECOWAS.
The challenges the GRA faced in the implementation of the tax system included illicit trade of tobacco, compliance issues with importers, tobacco industry interference in policymaking, and inadequate human resources, logistics, and capacity building for staff in customs.
To strengthen the implementation of the tax for effective tobacco control, the report recommended the specific excise component must be pegged to inflation and/or the US dollar as stated in the ECOWAS directive so that the importers will pay based on prevailing exchange rates.
“If the specific excise rate remains in the local currency, for example, GHS, then it must be increased annually to ensure that it is in line with the sum of inflation and income (GDP) growth rates.”
The report called for enforcement of existing tobacco control laws and regulations to ensure that retailers and wholesalers operated within the law.
“This requires building the capacity of the customs personnel and providing them with the necessary logistics to perform their work,” it said.
It called for enhanced coordination and collaboration between the GRA, FDA, and other relevant agencies to combat illicit trade.
“Addressing illicit trade will also require effective monitoring and evaluation mechanisms to track the impact of the new tax measures and identify areas for improvement from time to time.”
To this end, Ghana must implement tobacco track and trade systems in line with Article 8 of the WHO Framework Convention on Tobacco Control (FCTC) Protocol to Eliminate Illicit Trade in Tobacco Products as a matter of urgency.
It urged the removal of tax waivers or exemptions granted on tobacco products since the products offered no health benefits to the people.
“The government must strengthen the implementation of the WHO FCTC Article 5.3 to prevent the tobacco industry from its undue interference in tobacco control policies and regulations.”
The report called on the government to consider establishing a tobacco control fund sourced from the percentage of excise tax revenue and/or a solatium contribution (percentage of the value of tobacco products) by importers and manufacturers.
There are many countries earmarking tobacco tax revenues to support various activities. Aside from the excise taxes, some countries have a surcharge or additional levy solely dedicated to tobacco control activities.
For instance, in 2014, Kenya introduced a solatium fund to support tobacco control activities and tobacco companies pay two per cent of the value of tobacco products.
GNA