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Higher Taxes on Tobacco, Alcohol and unhealthy commodities Improve Health and Raises Revenue


The Vision for Alternative Development (VALD), Ghana Tax Advocacy Network for Health Promotion, and other civil society organizations are extremely worried about the rapid increase in the consumption of tobacco, alcohol, and other unhealthy products that are not only hazardous to the well-being of its consumers and non-consumers but also puts a heavy financial burden on the economic health of Ghana.

The Tobacco Atlas revealed that more than 5,000 Ghanaians die of tobacco diseases annually, with economic cost amounting to about GH₵97million. However, it is estimated that the Government of Ghana can save 22,000 lives by 2025 if all recommendations contained in the WHO “Best Buys”, most especially raising taxes on tobacco and alcohol and other unhealthy products are implemented.

The Ghana 2017 Global Youth Tobacco Survey in Junior High Schools shows that 8.9% of students, 8.9% of boys, and 8.2% of girls currently use tobacco products. 7.0% of boys and 5.3% of girls currently smoke tobacco. 0.4% of boys and 1.7% of girls currently smoke shisha.

It is important to note that a single stick of cigarette is just 0.20pesewas (while a pack of 10 sticks cost GHS 2.00) and a sachet of alcohol cost as low as GHS 1.00. In the same vein sugar sweetened beverages are equally cheap on the market. The low cost at which these products are sold are clearly targeted at the youth, the poor and vulnerable groups, increasing their health and disease burden including contracting chronic diseases such as non-communicable diseases (NCDs).
Again, the harmful use of alcohol is increasingly being recognized not only as a major public health concern but an affront to the socio-economic development of the continent. Although large body evidence has highlighted the high burden of harmful use of alcohol, many African countries including Ghana have done little to tackle this problem.

A major gap amidst this public health challenge is the lack of preventive, treatment, and rehabilitation interventions within existing healthcare systems to tackle alcohol related diseases and alcohol disorders.
The cost of treating diseases such as cancers, cardiovascular diseases, heart diseases, stroke, diabetes, etc. as a result of consuming these products are very expensive and are mostly not covered under the NHIS.

Exploring options for accelerating sustainable financing across domestic resource mobilization is the right way to go, hence the call for tax increment in the 2021 budget statement. This will aim at supporting government’s budget in financing health hence achieving the Universal Health Coverage (UHC) and Agenda 2030.
“Because low-income people are more sensitive to changes in tobacco prices, they will be more likely than high-income people to smoke less, quit, or never start in response to a tax increase. This means that the health benefits of the tax increase would be progressive.

One forthcoming study concludes that people below the poverty line paid 11.9 percent of the tobacco tax increase enacted in 2009 but will receive 46.3 percent of the resulting health benefits, as measured by reduced deaths” Frank Chaloupka.

Success story from other countries on benefits of taxes on unhealthy commodities

 Egypt: In 2018, adopted a Universal Health Coverage Law supporting healthcare for everyone including nearly 30% of Egyptians who cannot afford to pay. The initiative is partly funded by the tobacco taxes and polluting industries including cement.

 Mexico: The introduction of their Sugar Sweetened-Beverages (SSBs) tax in 2014 led to a drop in consumption of sugary drinks by over 5% in the first year and almost double in the second year, with the biggest drop (12%) on families with lowest incomes. This reduction in consumption is expected to lead to almost 200, 000 fewer type 2 diabetes cases, over 20, 000 fewer strokes, and heart attacks, and 18, 900 fewer deaths by 2022. The tax will save Mexico and its health service almost 0ne billion US dollars.

 The Philippines case study: In December 2012, the country’s healthcare financing system drastically changed. The newly passed Sin Tax Reform bill increased taxes on all tobacco and alcohol projects, providing a new injection of funding that enabled the Philippine Government to enroll more people in universal health care and scale-up NCD prevention services in primary care. In 2019, Philippine introduced a Universal Health Coverage Act, entitling all Filipino citizens to lower healthcare expenses through PhilHealth, funded in part by increases in tobacco and alcohol.

Financing health has become a major challenge within the health sector making it practically impossible for Ghana to meet the Abuja Declaration of 15% of the national budget dedicated to health. There untapped alternative revenue stream is much needed as this time to help the country achieve the President Agenda of Ghana beyond aid.

Key Action Required
At 13.02% of retail price, Ghana’s excise tax as a percentage of cigarette price can be significantly increased to meet the WHO minimum benchmark of 70% of retail price. Tobacco products have not received tax increment for more than 5years (2015-2019), this is evident in the cost of tobacco products in the country. Similarly alcohol products have not attracted tax increment in the national budget for more than 8 years.
To reduce the economic and social threat of tobacco and alcohol use and its associated diseases

  1. We, the Vision for Alternative Development and the Ghana Tax Advocacy Network for Health Promotion urge the Government of Ghana through the Finance Minister to increase tax (excise tax) on all tobacco and alcohol products and Sugar products in the 2021 Budget Statement to be presented by the Finance Minister in November 2020,
  2. We call for earmark of tobacco, alcohol, SSBs taxes for health promotion,
  3. We urge the Ministry of Finance to legislate to change the tobacco tax regime from ad valorem to specific tax as recommended by experts in the 2012 tobacco taxation action research in the ECOWAS Region and other best practices,
  4. We call on all institutions, groups and well-meaning individuals to support this clarion call for the Government of Ghana to increase taxes on these unhealthy commodities in the 2021 Budget Statement
    For further information, kindly contact:
    Labram Musah; Programme Director Vision for Alternative Development
    Convener, the Ghana Advocacy Network on Health Promotion
    E-mail: labrammusah@valdghana.org Mobile: 0243 211854
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