The imposition of excise duty on products classified as unhealthy and harmful to humans has been welcomed by the Ghana Non-Communicable Diseases (NCD) Alliance, a coalition of civil society organisations (CSOs). The group has said that the introduction of a 20% increase on taxes for alcoholic, tobacco products and sweetened drinks – also known as “sin taxes” – will serve as a disincentive for the availability, accessibility and affordability of sugar-sweetened beverages and other unhealthy commodities, such as tobacco, which can cause serious ill-health effects on users, who consequently rely on the National Health Insurance Scheme (NHIS) for treatment.
According to a team of Ghanaian researchers (Lartey et. al 2020), the average healthcare cost per admission for adults of healthy weight is US$35, whereas for overweight adults it is US$78 and for adults with obesity US$132. The study further estimated that 60% of the average total cost per person expended is borne by the National Health Insurance Scheme (NHIS). The Ghana NCD Alliance argues that this means that the government is paying huge sums of money for the treatment and care of obesity and its related diseases when lives and money could be saved with preventive tax policies on SSBs, tobacco and alcohol.
The wide availability, accessibility, and affordability of sugar-sweetened beverages and other unhealthy commodities have increased remarkably over the past decade. The result of a shift from healthy foods to junk foods is seen in the rising rates of obesity, especially among children, as well as other diet-related NCDs. Obesity leads to comorbidities with other non-communicable diseases such as cancer, mental illness, hypertension, bone diseases, and cardiovascular disease.
The group’s National Coordinator, Labram Musah, has lauded parliament for its recent passage of the Excise Duty Amendment bill 2022. “As the healthcare costs and deaths linked to these health-harming products keep increasing, this is the right intervention to protect young people, promote health outcomes, and guarantee sustainable financing for public health service delivery,” he said.
However, in an interview with the B&FT, Ali-Nakyea Abdallah, a tax expert and Senior Lecturer at the University of Ghana-School of Law, argued that the whole conversation around the increase of sin taxes centers largely on revenue mobilization. He suggested that this approach contributes to resistance from the business community. Abdallah emphasized that the communication around the tax increases was a problem. If taxation is approached as a consultative measure and the right signals are sent – that the role of this tax is to assist in addressing a health challenge – it will then win support from the tax-paying population and also the support of manufacturers.
Abdallah noted that the taxes in this case may not necessarily solve the health issues which CSOs are talking about. He argued that a different case could have been made if there were broader stakeholder consultations prior to the increase. “Taxation requires stakeholder engagement with the manufacturer, the taxpayer, the consumer and institutional bodies like the Food and Drug Authority and Ghana Standards Authority,” he said.
Parliament passed the Excise Duty (Amendment) bill, 2022, on 31 March 2023, in spite of industry resistance. The bill revises excise tax rates for cigarettes and other tobacco products to conform to the Economic Community of West African States (ECOWAS) protocols and raises revenue to mitigate the harmful effects of these excisable products. It also increases excise duty on wine, malt drinks and spirits, and imposes excise duty on sweetened beverages and electronic cigarettes to increase revenue.
The resulting impacts on listed products that will be affected by the newly introduced taxes on health and economy are enormous, according to the Ghana NCD Alliance.
Source: norvanreports.com