… anti-tobacco advocates push for higher rates to discourage child use
Research conducted by the Vision for Alternative Development (VALD) has revealed that despite the many efforts geared at discouraging tobacco use, especially among children through high tax rates, the commodity is very cheap on the market as the price for a stick of cigarette and a sachet of water is the same.
In addition to this, VALD noted that over the years little has also been done to make the sale of tobacco a discreet venture, as it continues to be displayed alongside common confectionaries on tables-tops across the country.
According to the VALD, this worrying phenomenon is one that needs urgent attention as it renders the hard work being put into reducing the risk of tobacco addiction among children inoe.
Director of VALD, Labram Musah, made this know at a five-day workshop under the theme ‘Deepening Tobacco Tax Advocacy in Africa’ organised by the Bill and Melinda Gates Foundation (BMGF), Tax Justice Network Africa (TJNA) and Vision for Alternative Development (VALD).
Mr. Musah, in an interview with the B&FT said: “Cigarettes are so cheap in Ghana; you know we have different types. For at least GH¢1.50 pesewas – less than GH¢2 – you can get a pack. And the worst part is that about 20-30 pesewas can get you a stick.
“Imagine how cheap it is. There have been several increments, but these seem not to have had any impact on the product. If you are adopting tax measures for products like this, you are supposed to feel it. When the prices go higher some people would have to drop out, because they don’t have extra money to spend on it.”
Amendment of tax regime
As a result, the Tax Justice Network Africa (TJNA) is pushing for an amendment to the current tobacco tax regime. A policy officer at Tax Justice Network Africa, Rodgers Kidiya said: “In many African countries we have torn tax systems which are susceptible to influence by the influential elites in society.
“What we are pushing for is very simple and specific uniform rates for tobacco. If we have a simple, specific and uniform rate on tobacco products we will have predictable taxes, and we would have up to a 70 percent increase in terms of revenue. We would also have another advantage of reducing the level/effects of tobacco use.”
Tobacco Tax regime
Currently, the rate of taxation on tobacco products is 175 percent – one of the highest on the country’s revenue books. The rate is slapped on Cost, Insurance, Freight (CIF), duties and taxes and any other expenses, excluding VAT and Excise duty. The rate was set high as a means to make the product an expensive commodity that would be out of reach of many people – and help government rake in huge revenue from persons who import them. Despite this rate, the product has remained cheap on the market.
A Chief Revenue Officer-Excise Division of GRA, Kwabena Apau Anto, explained that the major challenge being faced is enforcement. “Imposing the tax rate is one thing and enforcing is another; making sure that the tax rate is imposed on the right value is also another challenge.
“As a tax authority, we are looking at it from all these angles – making sure that the tax rate of 175 percent is imposed on the appropriate value. Because if you have a very high tax rate and the value on which the tax is imposed is very low, you will never get the desired results.
“Also, along the chain until it gets to the final consumer, we should make sure that at every stage from the wholesaler to the distributor to the retailer, all the relevant taxes along the chain is rightly paid,” Mr. Anto said.
Effect of high tax on tobacco
The World Health Organisation estimates that in Africa a 50 percent increase on tobacco taxes would increase revenue to about 70 percent, and also avoid 11 million deaths related to tobacco use.
Effects of tobacco use
Cigarette smoking harms nearly every organ of the body, causes many diseases, and reduces the health of smokers in general. Although nicotine itself does not cause cancer, at least 69 chemicals in tobacco smoke are carcinogenic – and cigarette smoking accounts for at least 30 percent of all cancer deaths. The overall rates of death from cancer are twice as high among smokers as non-smokers, with heavy smokers having a four times greater risk of death from cancer than non-smokers
Ongoing tax workshop
The ongoing five-day workshop has an overall goal of strengthening tobacco tax policy as an effective means of capturing significant revenue; reducing tobacco’s massive cost to social national economies (in healthcare costs and lost productivity); and protecting public health in Africa. The workshop will have both a sitting (a total of 25) and online audience, drawn from five countries (Ghana, Kenya, Zambia, Nigeria and DRC) set to implement the project.