VALD-Ghana calls for regular adjustment of Excise Tax on tobacco for effectiveness

The Vision for Alternative Development- Ghana (VALD-Ghana) has called for regular adjustment of the Excise Tax on tobacco to maintain its effectiveness against inflation.

It stated: “Periodic reviews and increases to the specific excise tax can ensure that tobacco products remain unaffordable over time, reducing consumption in the long term.”

Labram Musah, the Executive Director of Programmes of VALD-Ghana made the call in a presentation at a stakeholders’ review meeting on Excise Tax Implementation in Ghana.

The Presentation was on the topic: “Enhancing Public Health and Revenue Generation: The urgent need for Ghana to revise its Tobacco Excise Tax Structure.”

Musah said a post assessment of the Excise Tax implementation conducted VALD-Ghana revealed that due to Ghana’s high inflation rate and currency depreciation, the real value of the specific excise tax has greatly decreased.

“When initially set at 0.02 USD (0.28 pesewas); however, recent inflation and exchange rate shifts have made tobacco products affordable than intended, limiting the policy’s effectiveness in reducing consumption and improving public health,” he noted.

The Executive Director said to address the impact of currency depreciation on the effectiveness of the Excise Tax, Ghana needed to peg its specific excise component to the US dollar, in line with the ECOWAS directives.

“This measure would stabilize the real value of the tax, preventing fluctuations that make tobacco more affordable, and the pegging would secure a consistent real value for the excise, countering inflationary impacts and sustaining the policy’s deterrent effect,” he said.

Musah said according to the World Health Organisation, “When tobacco taxes do not keep pace with inflation, the effectiveness of these taxes in reducing consumption diminishes, allowing tobacco use to persist among price-sensitive populations.”

Dr Alex Kombat, Senior Revenue Officer of the Ghana Revenue Authority in a presentation said the implementation of the Excise Duty Amendment Act has improved revenue generation and reduced the prevalence of tobacco use.

He said since the implementation of the Import Excise Duty (Specific) on tobacco for about one year, four months, it had raked 252,477,842.68 revenue for the country and described it as a remarkable achievement.

Dr Kombat stated that among the objectives of the Amendment was to raise revenue, achieve fiscal sustainability, and allocate resources towards priority areas such as healthcare.

He said: “The responsibility of the government is to protect the citizenry against any health risks associated with consumption of harmful products and that one means of doing this is through imposition of health taxes/sin taxes on such products in Ghana.”

He pointed out that health taxes are levied on products that have negative public health impact especially alcoholic beverages, wines/spirits, tobacco, carbonated drinks, sugar sweetened beverages, flavoured water and plastics.

“The health taxes are aimed at correcting market failure for negative externalities and internalities,” he stated.

Dr Kombat said although the Ghana Revenue Authority has put in place measures to curb tax evasion and illicit trade in tobacco products, illicit excisable products could be found on the Ghanaian markets and urged for all hands-on deck to fight the menace.

He called researchers to assess the impact of the amendment and present results to the Ghana Revenue Authority, and the Ministry of Finance to help find the need for another amendment to the Act.

Dr Olivia Agyekumwaa Boateng, the Head of Tobacco and Substances of Abuse Department of the Food and Drugs Authority (FDA), said the passage of the Excise Duty Amendment Act marked a significant milestone in tobacco control in Ghana.

She said the Authority was committed to supporting the continued implementation of Act to contribute to healthier individuals and communities.

Dr Boateng said as part of enforcing the smoke-free policy under the Public Health Act, the FDA has been awarded the Tobacco Policy Action Fund for Africa (TOPAFA) project by the Management Sciences for Health.

“TOPAFA plays a crucial role in implementing tobacco control policies and addressing funding gaps in African countries that are signatories to the WHO FCTC, including Ghana,” she stated.