Vision for Accelerated Sustainable Development Ghana — GH Legal Update

Vision for Accelerated Sustainable Development Ghana (VAST Ghana) has urged the Ghanaian government to significantly strengthen its excise tax regime on tobacco products, alongside alcohol and sugar-sweetened beverages. This call, made during a Ministry of Finance stakeholder engagement, aims to combat the escalating burden of Non-Communicable Diseases (NCDs) and boost domestic revenue mobilization. While Ghana has recently introduced a hybrid tax system for tobacco, the current total tax burden remains substantially below the World Health Organization's recommended 75% of the retail price. VAST Ghana advocates for an immediate increase in specific excise duties, automatic annual adjustments, and the removal of tax exemptions to align with international best practices and achieve dual public health and fiscal benefits.

Ghana faces a growing public health crisis driven by the increasing prevalence of Non-Communicable Diseases (NCDs), including cardiovascular diseases, cancers, diabetes, and chronic respiratory illnesses. Tobacco use is identified as a significant modifiable risk factor contributing to this burden. In response, Vision for Accelerated Sustainable Development Ghana (VAST Ghana) has issued a compelling call for a comprehensive overhaul of the nation's excise tax regime, specifically targeting tobacco products, alcohol, and sugar-sweetened beverages. This appeal was made during a crucial stakeholder engagement organized by the Ministry of Finance on the Draft Strategic Framework and Proposed Overarching Legislation for Non-Tax Revenue Mobilisation and Management.

VAST Ghana's proposition is rooted in the dual benefits that robust health taxes offer: simultaneously improving public health outcomes by discouraging the consumption of harmful products and generating substantial government revenue to support national development priorities. The organization highlighted that Ghana's current excise tax framework for tobacco falls short of internationally accepted standards, particularly the World Health Organization's (WHO) recommendations. This article will delve into the existing legal and policy landscape governing excise taxes on tobacco in Ghana, analyze VAST Ghana's specific recommendations, and explore the broader implications for legal practitioners and public health advocacy.

The legal framework for excise duties in Ghana is primarily governed by the Excise Duty Act, 2014 (Act 878), which imposes excise duty on specified goods manufactured in or imported into the country, including tobacco products. This Act has seen significant amendments, notably the Excise Duty (Amendment) Act, 2023 (Act 1093), which aimed to revise excise duties for cigarettes and other tobacco products to conform with Economic Community of West African States (ECOWAS) protocols and mitigate the harmful effects of these products. Prior to this amendment, Ghana primarily applied an ad valorem rate of 175% of the Cost, Insurance, and Freight (CIF) value for imported tobacco products or the ex-factory price for locally manufactured ones.

Beyond fiscal legislation, tobacco control measures are enshrined in Part 6 of the Public Health Act, 2012 (Act 851), which addresses aspects such as smoking in public places, tobacco advertising, promotion, and sponsorship, and tobacco packaging and labelling. These provisions are further detailed in the Tobacco Control Regulations, 2016 (L.I. 2247). Ghana ratified the WHO Framework Convention on Tobacco Control (FCTC) in 2004, demonstrating its commitment to implementing effective tobacco control policies. Despite these legislative efforts, the total tax burden on tobacco products in Ghana, which was around 22.55% of the retail price in 2024 and 23% in 2023, remains significantly below the WHO's recommended benchmark of at least 75% of the retail price.

The urgency for stronger measures is underscored by the substantial burden of NCDs in Ghana. These diseases are a leading cause of illness, disability, and premature deaths, with tobacco use identified as a key risk factor. The National Policy for the Prevention and Control of Chronic Non-Communicable Diseases in Ghana (2022-2026) explicitly aims to reduce exposure to NCD risk factors, highlighting the critical role of policy interventions like taxation.

The recent introduction of a specific excise tax on cigarettes through the Excise Duty (Amendment) Act, 2023 (Act 1093), marked a positive shift in Ghana's tobacco taxation strategy. VAST Ghana points to the success of this hybrid system, noting that a specific excise duty of GH¢0.28 per cigarette stick contributed to a remarkable increase of over 300% in tobacco excise revenue, generating more than GH¢700 million. This demonstrates the potential of targeted taxation to yield both fiscal and public health dividends. However, despite this progress, the overall tax on tobacco products in Ghana still constitutes only about 23% of the retail price, falling far short of the WHO's recommended 75% threshold.

A key challenge identified in Ghana's previous ad valorem tax structure was its susceptibility to manipulation by the tobacco industry. Levying the tax on the CIF value or ex-factory price, which is often a small fraction of the retail price, meant that increases in the ad valorem rate had a minimal impact on the final consumer price. This effectively made tobacco products more affordable over time, undermining public health objectives. The WHO FCTC Article 6 recommends a simple tobacco tax system, preferably specific or mixed, to overcome these limitations.

VAST Ghana's recommendations directly address these shortcomings. They advocate for an immediate increase in the specific excise tax on cigarettes from the current GH¢0.28 per stick to GH¢1.00 per stick, equivalent to GH¢20 per pack, to ensure total taxes account for at least 75% of the retail price. Furthermore, they propose granting the Ghana Revenue Authority (GRA) the power to automatically adjust tobacco taxes annually in line with inflation and economic growth, a measure crucial for maintaining the real value of taxes and preventing products from becoming more affordable. The organization also calls for the removal of tax exemptions on tobacco imports originating from ECOWAS member states and duty-free outlets, which can create loopholes and undermine tax effectiveness.

From a public health perspective, increasing tobacco excise taxes is widely recognized as the most effective intervention to reduce tobacco consumption and improve health outcomes. Economic modeling studies for Ghana have shown that implementing a robust mixed tax structure, such as a specific excise tax of GH₵4.00 (US$0.80) per pack in addition to the existing ad valorem rate, could lead to a 128% increase in the average retail price, a 27% decrease in cigarette consumption, and a staggering 627% increase in tobacco excise tax revenue. These figures underscore the significant potential for both health gains and revenue generation. While concerns about illicit trade often arise with tax increases, independent research suggests that such trade is often exaggerated by the industry and its scale is usually insignificant. Instead, strengthening tax administration and modernizing the excise tax stamp system, as also recommended by VAST Ghana, are crucial for combating illicit trade.

VAST Ghana's call for a stronger excise tax regime on tobacco products is a timely and critical intervention in Ghana's ongoing battle against the rising burden of Non-Communicable Diseases. The evidence overwhelmingly supports the efficacy of increased tobacco taxation as a dual-purpose policy instrument, capable of significantly improving public health outcomes while simultaneously generating substantial domestic revenue. While Ghana has made strides with the recent introduction of a specific excise tax, the current tax burden remains far below international best practices and the WHO's recommended benchmarks, leaving considerable room for improvement.

For legal practitioners, these developments signal a dynamic policy environment. Attorneys advising clients in the tobacco industry must be acutely aware of the increasing pressure for stricter regulations and higher taxes, necessitating proactive compliance strategies and potential shifts in business models. Conversely, legal professionals involved in public health advocacy, legislative drafting, or human rights will find fertile ground for engagement, supporting the government in crafting and implementing robust, FCTC-compliant tax policies. The ongoing dialogue, particularly within the Ministry of Finance, indicates a governmental appetite for reform. Stakeholders should closely monitor legislative developments, particularly any proposed amendments to the Excise Duty Act, 2014 (Act 878), and advocate for the adoption of VAST Ghana's comprehensive recommendations to unlock Ghana's full potential for a healthier population and a more robust fiscal landscape.