GRA to revise tax structure on tobacco products

Twin policy on tobacco products to be implemented this year, GRA

New tax structure is a global decision, GRA

Stakeholders bemoan low retail price of tobacco products

The Ghana Revenue Authority says the twin policy of ad valorem and specific excise duty on tobacco products will be implemented this year after consultations with relevant stakeholders are completed.

Head of Excise at the GRA, Kwabena Apau Awuah, speaking in a Citi Business News interview, at the launch of a study report on the Economics of Tobacco Taxation in Ghana organized by the Vision for Alternative Development said the decision to roll out the taxes have been decided on by ECOWAS.

“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% of ad valorem excise duty on tobacco products and a specific excise duty of two cents per stick."

He adds that the revision of the tax structure will ensure that the right value is generated from the taxes applied.

“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.”

Tobacco products such as cigarettes, cigars, and cheroots are taxed in Ghana. Excise tax and sales tax or VAT, import duty, a health insurance levy, ECOWAS levy, economic development and investment levy are taxes on tobacco products such as cigarette, cigars, and cheroots in Ghana.

Meanwhile, stakeholders have over the years decried the fact that even though a lot of taxes are charged on the products, they do not reflect significantly in their retail prices.

This, according to CitiBusiness reports is because Ghana uses an ad valorem rate of 175 percent of the insurance and freight (CIF) value to determine the excise to be paid and because the CIF value is a small fraction of the retail price, the excise tax also becomes low.