GRA in talks with stakeholders to increase tax on tobacco products

The Ghana Revenue Authority (GRA) says plans are underway to alter the country’s present tobacco tax structure.

In Ghana, tobacco goods like cigarettes, cigars, and cheroots are taxed. Excise tax, sales tax, or VAT, import duty, a health insurance levy, an ECOWAS levy, and an economic development and investment levy are among the taxes.

Despite the numerous taxes imposed on tobacco goods, the taxes account for only a small portion of the total retail price.

The reason for this is because Ghana calculates the excise to be paid using an ad valorem rate of 175 percent of the insurance and freight (CIF) value, and because the CIF value is a small fraction of the retail price, the excise tax is also low.

As a result, stakeholders have been calling for a dedicated excise tax on tobacco goods for many years in order to raise more income for the country while also reducing tobacco consumption.

Twin policy

The GRA has responded by stating that it is in talks with key stakeholders to implement the twin policy of ad valorem and particular excise duty on tobacco products later this year.

Kwabena Apau Awuah, the Authority’s Head of Excise, in an interview with Citi Business News in Accra at the introduction of the Vision for Alternative Development’s study report on the Economics of Tobacco Taxation in Ghana.

“Discussions are ongoing at the national level together with the GRA and Finance Ministry to introduce a mixed ad valorem and specific excise duty on tobacco. That is a decision that has been taken at the ECOWAS level. There is a directive that requires all member states to introduce at least 50 percent of ad valorem excise duty on tobacco products and a specific excise duty of two cents per stick,” he said.

“If these measures are introduced, it’ll address the question of the difficulties that we are having on taxing the right value. Even though our excise duty rate on tobacco is very high because the value on which the tax rate is imposed is low, we still have difficulties in getting the right impact by increasing the price so that it becomes out of reach for the ordinary Ghanaian,” he added.