Report on Economics of Tobacco in Ghana launched

Economics Report Launch
Report Launch

The Vision for Alternative Development (VALD) has launched a 45-page Study Report on Economics of Tobacco in Ghana with a call on the government to revise the tobacco tax structure.

It said the revision should consider the re-introduction of specific tax in addition to the ad-valorem tax system while calling for an increase in education on the hazards of tobacco use to stem the tide of the prevalence of the product.

The Executive Summary of the Report said as many as eight million lives were lost annually to tobacco use across the world, with the global economy suffering an economic burden of US$1.4 trillion due to tobacco use.

“In Ghana, over 5,000 people die annually from tobacco use (about 6,639 deaths in 2019). The associated economic cost and burden of smoking are as much as GHc97 million, making tobacco use a major public health threat in the country,” it said.

The Report said this was particularly so because an estimated 804,900 (15 plus years) smoked cigarettes in 2015 on daily basis and the number of smokers was projected to reach 1.7 million by 2025.

“Although Ghana was one of the first African countries to have ratified the World Health Organisation Framework Convention on Tobacco Control (WHO FCTC) in 2004, the country’s implementation of the accompanying obligations is far from desirable.

“Indeed, until 2012 when the Public Health Act (Act 851) was enacted, the country did not have a comprehensive legislative document that regulated tobacco trade and usage. Moreover, not only has Act 831 not been fully enforced, but most people are not aware of the existence of the law and what the law entails.

“In addition, although the laws provided for the establishment of cessation centres at regional and district levels for persons addicted to tobacco who want to quit, this has not been implemented,” it said.

The Study stated that with the projected upward trajectory of tobacco use, the accompanying loss of lives, the economic burden and the weak enforcement of the tobacco control enactments, it was imperative to critically reflect on the economic aspects of tobacco control implementation in Ghana by undertaking relevant research to generate evidence to inform policy, and thus aid in the development, implementation, and evaluation of tobacco control measures.

“This study steps up to such a clarion call as it provides critical evidence to inform policies on public health and tobacco control (especially through taxation) to aid the achievement of the objectives of Ghana’s Tobacco Control Act 2012 and the Tobacco Control Regulation 2016 (LI 2247) as well as Government’s obligations under the WHO FCTC.

“The study makes use of secondary and primary data sources with an extensive content analysis through the scanning of existing relevant data, in-depth review/study of relevant tobacco control documents, policy documents, and extensive review of literature on tobacco economics,” the Report said.

It observes that tobacco use in Ghana is dominated by manufactured cigarettes, accounting for over 90 per cent of tobacco products used in the country, adding that; “Indeed, as many as 2.4 billion cigarettes (excluding illicit ones) were smoked annually on average between 2007 and 2015 in Ghana.”

“The surge is expected to be driven largely by males, the uneducated, the poor and rural dwellers. Ghana has a significant illicit tobacco market, constituting 20 per cent to 30 per cent of the total market. Employment in the tobacco sector is on the decline, largely on the back of a decline in the real value of tobacco leaf production and the exit of BAT, a major employer in the industry and the largest buyer of tobacco leaf,” the Report said.

It said Ghana had 11 taxes on tobacco products and the tax structure is ad-valorem with cost, insurance, and freight (CIF) as the basis for determining the tax payable while the tax rate (about 200 per cent of CIF) was seemingly high compared to the rest of the sub-region, adding that; “The tax structure is such that it has a very low tax proportion of the retail price.”

“Ghana’s tax share (either excise or total tax) is below the 70 – 75 per cent recommended by the WHO. This is because of the ad-valorem tax structure being used. It is therefore not farfetched that tax revenues from the tobacco industry have registered a moderate decline over the years,” the Report said.

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