Raise excise tax on tobacco to make it expensive… ISSER tells government
A study by the Institute for Statistical, Social and Economic Research (ISSER) stated that if excise tax were perceived as a specific tax on tobacco, it would significantly improve fiscal and public health effects in Ghana.
However, since the specific tax would be eroded by inflation, the Ministry of Finance should regularly adjust the nominal excise tax according to the rate of inflation and the rate of economic growth over time to ensure that the product does not become more affordable.
The study focused on the fiscal and public health impact of a change in excise taxes on tobacco in Ghana and was carried out by Mr. Christian K. Osei and MsAma Fenny (Phd) from ISSER – University of Ghana and presented at a national stakeholder meeting on tobacco taxation. in Ghana.
The meeting was organized by Vision for Alternative Development (VALD), a civil society organization, in collaboration with the Ghana Revenue Authority in Accra.
The study indicated that in developed economies tobacco was less affordable over time due to increased taxes, while in developing economies including Ghana tobacco products were more affordable with minimal tax change.
He said that although Ghana imposes the highest Ad-valorem tax rate of 175% in the sub-region, it was burdened with consequent challenges such as sensitivity to the undervaluation of tobacco products and the encouragement of the “Trading Down” effect in favor of cheaper cigarettes. , thereby reducing the health benefits.
He noted that by 2030, more than 80% of tobacco-related diseases would come from low- and middle-income countries and that every year more than 5,000 people in Ghana are killed by tobacco-related diseases, adding that 75 men and 21 women die each week due to smoking according to the Tobacco Atlas (2018).
The study indicates that article 6 of the recent ECOWAS directive on tobacco control in the sub-region requires member states to subject tobacco products to an excise duty, which must include an ad-valorem duty. and a specific right (ECOWAS Protocol, 2017).
“The National Cancer Institute and the World Health Organization (WHO) show that a minimum uniform specific excise duty is required. However, if a country is already implementing an Ad-valorem system, it can add a specific uniform element to it, as these systems have considerable advantages over the purely Ad-valorem system (IARC, 2011; NCI and WHO, 2017) , ” he stated.
The study indicated that the effective implementation of the specific mixed tax system requires strong tax administration, political will and technical capacity.