A report on the Post-Assessment of Tobacco Taxation in Ghana 2024 has been shared with stakeholders to facilitate the implementation of the excise tax on tobacco products in the country.

The post-assessment study, commissioned by Vision for Alternative Development (VALD) with the support of Tax Justice Network Africa, examined the impact of the Excise Duty Amendment Act 2023 (Act 1108), which came into effect in May 2023.

The new tax law aims to significantly increase tobacco prices, reduce consumption, and generate additional government revenue for public health initiatives.

The report was presented at a National Stakeholders Dissemination Meeting organized by VALD and attended by representatives from the Ministry of Health, Ghana Revenue Authority (GRA), Food and Drugs Authority (FDA), WHO Country Office, and other civil society organizations.

Dr. Michael Kofi Boachie from the SAMRC/Wits Centre for Health Economics and Decision Science – PRICELESS, South Africa, presented the findings of the study.

Key Findings

Dr. Boachie stated that Ghana implemented the Excise Duty Amendment Act in 2023 to align its tobacco taxation system with the ECOWAS directive and international standards.

The new tax adopted the exact ad valorem rate (50%) as specified in the ECOWAS directive. However, the specific tax was not pegged to the dollar or inflation.

As of May 2024, US$0.02 was equivalent to approximately GHS0.30.

“This means that Ghana may be charging a specific tax lower than the ECOWAS rate depending on exchange rate movements,” Dr. Boachie explained. “Based on the exchange rate in May 2024, we estimate that Ghana is losing GHS0.02 on each cigarette consumed.”

Despite this, the hybrid tobacco excise system increased revenue from GHS220,798,555 (May 2022–April 2023) to GHS454,466,107 (May 2023–April 2024), representing a 106% growth in revenue, even after granting tax waivers on tobacco products from within the ECOWAS region.

Challenges in Implementation

The GRA faced several challenges in implementing the new tax system, including:

Illicit trade in tobacco products

Compliance issues with importers

Tobacco industry interference in policymaking

Inadequate human resources, logistics, and capacity-building for customs staff

Recommendations for Strengthening Tobacco Tax Implementation

To strengthen the implementation of the tax and ensure effective tobacco control, the report made the following recommendations:

Pegging the Specific Excise to Inflation or Exchange Rates

The specific excise component must be pegged to inflation and/or the US dollar, as outlined in the ECOWAS directive, ensuring that importers pay according to prevailing exchange rates.

If the specific excise rate remains in local currency (GHS), it must be adjusted annually to keep pace with inflation and income (GDP) growth rates.

Enforcement of Tobacco Control Laws

Existing tobacco control laws and regulations should be enforced to ensure retailers and wholesalers operate within the law.

Customs personnel should be trained and provided with the necessary logistics to enhance their performance.

Combating Illicit Trade

Enhance coordination and collaboration between the GRA, FDA, and other relevant agencies to combat illicit trade in tobacco products.

Implement tobacco track-and-trace systems in line with Article 8 of the WHO Framework Convention on Tobacco Control (FCTC) Protocol to Eliminate Illicit Trade in Tobacco Products.

Removal of Tax Waivers on Tobacco Products

Remove tax waivers or exemptions granted on tobacco products, as these products provide no health benefits to the public.

Preventing Industry Interference

Strengthen the implementation of WHO FCTC Article 5.3 to prevent undue interference by the tobacco industry in tobacco control policies and regulations.

Establishing a Tobacco Control Fund

The government should consider establishing a tobacco control fund, sourced from a percentage of excise tax revenue or a solatium contribution (percentage of the value of tobacco products) from importers and manufacturers.

Other countries, such as Kenya, have introduced similar funds. For example, Kenya introduced a solatium fund in 2014, where tobacco companies pay 2% of the value of tobacco products to support tobacco control activities.

The report emphasizes that these recommendations are vital for the long-term success of tobacco taxation and effective public health policy in Ghana.