CSOs Advocate for Increased Excise Tax Rates on Tobacco, SSBs, and Alcohol to Curb Consumption
Civil Society Organisations (CSOs) – Revenue Mobilisation Africa (RMA), Vision for Alternative Development (VALD) Ghana, and the CSOs Budget Forum – have made a call for an increment in the 50% ad valorem benchmark and 28 pesewas specific excise tax rates on tobacco, sugar-sweetened beverages (SSBs) and alcohol.
The call for the increment in the 50% ad valorem benchmark and 28 pesewas specific excise tax rates was made at the National CSOs Dialogue on Enhancing Excise Taxation in Ghana themed, “Enhancing Excise Taxation for Public Health Protection and Revenue Mobilisation.”
According to the CSOs, the increase in the excise rate that we are looking for would actually increase the price of the product, the retail price of the product. Now, the lower the ad valerian, the lower it would be, I mean, the retail price would be because you need to put the two together in order to calculate the retail price.
“Our call is that the 50% is a benchmark, but there are other countries in Africa like Botswana and Liberia that are doing more than the 50% benchmark, so we should also do more. Because, if we stay on the benchmark then it’s an incentive for people to even consume tobacco, SSBs, and alcohol products more.
“When consumers of these products begin to feel that the tax hike increment is too much for them to bear and that they can’t sacrifice their household income for such harmful products, some of them will begin to drift away from consuming these harmful products and that is what we are calling for. Because the more people drift away from it, the fewer challenges we have with non-communicable diseases in the country,” remarked Policy Analyst with Policy Innovate Africa, Richard Amevor.
The ECOWAS directive on the harmonization of the exercise duty of tobacco products directs that excise duty on Tobacco products must include ad valorem and specific duty rate.
The ad valorem rate is required to be 50% or more on the value while the specific tax rate is required to be a minimum equivalent of two cents per stick in the case of cigarettes, cigars, cigarillos, and the cedi equivalent of $20 per net kilo for all other tobacco products.
Previously the ad valorem tax before the implementation of the Excise Duty Amendment Tax and the ECOWAS directive on the harmonisation of the exercise duty ranged between 0%-175%.
The Excise Duty Amendment Tax aims to generate substantial revenue while concurrently reducing the consumption of alcoholic beverages, tobacco products, and SSBs. The revised legislation since its passage, has resulted in a 20% increase in taxes on these products.
On the back of the Excise Duty Amendment Tax, the Ghana Revenue Authority (GRA) has projected a total tax revenue of GHS 455 million to be mobilized in 2023 from Sugar-Sweetened Beverages (SSBs), alcohol, and tobacco.
With the aim of generating substantial revenue while discouraging excessive consumption, the Excise Duty Amendment Tax reflects the government’s commitment to addressing public health concerns through effective taxation.
By increasing the financial burden on these products, the government hopes to make them less financially accessible, thus curbing consumption and reducing the associated health risks.
This is because the consumption of tobacco, alcohol, and unhealthy diets have been identified as major contributors to NCDs, which claim the lives of over 41 million people globally each year. In Ghana alone, about one out of every three deaths are attributed to NCDs.
Executive Director of Vision for Alternative Development (VALD) Ghana, Labram Musah, also speaking at the National CSOs Dialogue, advocated benchmarking taxes on SSBs, tobacco, and alcohol to the prevailing headline inflation rate in the country.
Mr Musah argues that adjusting taxes in line with inflation is vital in making SSBs, alcohol, and tobacco less affordable, thereby curbing consumption and improving public health outcomes.
By linking taxes on SSBs and alcohol to inflation and adopting a more robust taxation framework on tobacco, he believes that the increased financial burden will discourage consumption and contribute to better public health outcomes.
Furthermore, Mr Musah urged the government to prioritize the allocation of a significant percentage of tax revenues generated from SSBs, alcohol, and tobacco to support healthcare delivery in the country.
This allocation would be crucial in addressing the broader health implications and associated costs resulting from the consumption of these products, adding that by investing in healthcare infrastructure, prevention programs, and public awareness campaigns, the government can ensure the well-being of Ghanaian citizens.
