Pass the Excise Duty Amendment Bill Now to Avert Tobacco, Alcohol and Sugar related Diseases and Deaths
The rise in NCDs is as a result of the affordability of tobacco, alcohol and SSBs leading to diseases such as diabetes, cancers, cardiovascular diseases, heart disease, liver and lungs diseases and mental health etc.
The Vision for Alternative Development (VALD-Ghana) together with the Ghana NCD Alliance, Tax Advocacy Network for Health Promotion, Community Health Support Team (CHEST), Jaishi Youth Initiative, Concern Health, Revenue Mobilization Africa, Media Alliance in Tobacco Control and Health (MATCOH) and many other civil society organizations commend the Ministry of Finance for taking a bold step to include in the 2023 Budget Statement an excise tax on health harming products such as tobacco, alcohol and sugar sweetened-beverages (SSBs) which was presented to Parliament in November, 2022. We are delighted that our members of Parliament largely spoke in favor of the proposed bill, during the 2nd reading of the Excise Duty Amendment Bill in Parliament.
We appreciate the fact that, apart from the revenue government would accrue to advance social and economic development, the debate for the proposed excise tax largely centered on the health consequences leading to the increasing rate of non-communicable diseases (NCDs). The rise in NCDs is as a result of the affordability of tobacco, alcohol and SSBs leading to diseases such as diabetes, cancers, cardiovascular diseases, heart disease, liver and lungs diseases and mental health etc. This for us from the civil society, academic and development institutions is an indication of the fact that government is looking at the evidence and public health interest as against the interest of few industry players, who in many cases exports the profits to their countries.
The proposal to increase taxes on these unhealthy- products is long overdue, the last time an amendment was made to adjust taxes on tobacco products was in the 2015 budget statement, which rose the excise tax from 150 percent to 175 percent. Unfortunately, because this was an ad valorem component which are largely manipulated by the industry and does not really account for inflation, the prices of cigarettes continued to remain relatively cheap on the Ghanaian market, increasing the accessibility and exposure to children and young people as well as the poor. The economy also loses huge chunk of revenue due to under declaration by the industry.
The proposed excise tax on tobacco, currently before Parliament is a combination of the ad valorem and specific tax- A mixed tax structure, we are particularly enthused about. A study by the VALD-Ghana and the Institute Of Statistical, Social And Economic Research, observed that a mixed tax structure of 175 per cent ad valorem with a specific component of GH₵3 per cigarette pack would increase the average retail price by 96 per cent. This would decrease cigarette consumption by 22.5 per cent, and increase excise tax revenue by 499.5 per cent, with an overall tobacco-related tax revenue by 159.7 per cent. Another analysis (unpolished) by WHO-FCTC, VALD Ghana, UNDP, Research Unit of the Economics of Excisable Products (REEP) among others suggest that increasing tobacco taxes by introducing a specific excise tax of GHC 6 on cigarettes in Ghana will satisfy the ECOWAS directive of a specific minimum excise tax of at least US$0.40 per pack will generate an additional GHC 131 million in revenue while reducing consumption by 26.6 percent in 2023. This mechanism would avert some 34,600 deaths during the life spans of Ghanaians living now.
Evidence from other countries shows that excise tax increases have a significant effect on the reduction of smoking prevalence and the number of averted smoking-attributable deaths.
Rwanda, between 2001 and 2015 taxed tobacco products using ad valorem system with the CIF or the ex-factory price as the base. In July 2015, the Government of Rwanda added a specific excise tax to the existing ad valorem system. The base for the ad valorem tax was changed from CIF/ex-factory price to the retail price. This created a mixed tax system for tobacco products. This new tax policy resulted in reduced consumption of tobacco products.
It is against this backdrop that we urgently call on our MPs and the citizenry to support the recommendations in the study report dubbed, “Economics of Tobacco Taxation/Control in Ghana” by VALD-Ghana to improve public health and raise additional resources to support the “Ghana Beyond Aid” agenda.
Raising taxes on tobacco is the most effective way to reduce tobacco use.Without significant tobacco taxation, cigarettes will remain affordable and easily accessible to the world’s billion-plus smokers endangering the health of young people and minors especially.
Despite this welcoming news of a proposed tax increment on tobacco, alcohol and SSBs, we are mindful and vigilant of the strong opposition by the industry and its front groups, both openly and subtly. The industry interferes in public health policies especially measures to increase taxes on health harming products. Evidence suggests that the industry have used false science to discredit live-saving measures, render them unimplementable or largely skew it in their favour and continue to inflict health harms on their clients/consumers with their products.
VALD-Ghana, Civil Society Organizations and the International community will continue to ensure that the ECOWAS directives and WHO requirements and guidelines in treaties/conventions such as the WHO FCTC and Best Buys etc. are aptly addressed by the appropriate government agencies without industry interference.
The public support for taxes on tobacco, alcohol and SSBs are overwhelming, we therefore count on our members of Parliament to look at the evidence and consider the public health gains and oppose firmly industry argument and interest.
“The fate of millions of lives depends on all of us to act decisively to end this global epidemic to save both the present and future generations”.
Executive Director of Programs, Vision for Alternative Development
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Communications Officer: VALD Ghana