The Ministry of Health in Ghana is calling for an increase in excise duties on three unhealthy consumables to raise an additional GH¢3.5 billion.
The three are tobacco, alcohol and sugar-sweetened beverages which have been identified to be among the main causes of non-communicable diseases (NCDs) such as hypertension, stroke, diabetes and cancers.
The ministry also wants the revenue generated from those specific taxes to be channelled into the management of NCDs which have assumed alarming levels in the country in recent years and causing 17,000 deaths every year.
The Minister of Health, Kwaku Agyeman-Manu, made this known in Accra at a meeting to disseminate a study done by the World Health Organisation on how such health taxes could improve health outcomes in managing NCDs.
“In as much as we admit that the increase in the taxes on these products may reduce consumption, it also presents a good opportunity to expand fiscal space to support government priorities which include health-related interventions focusing on NCD prevention, early detection and treatment to mitigate a huge financial burden on individuals and the state in future,” he said.
He said the concept of health tax was a powerful tool for revenue generation that had been successfully implemented in many countries.
Health taxes involve the levying of charges on products that are deemed harmful to health, such as tobacco, alcohol and sugar-sweetened beverages.
“The ad valorem tax should be maintained while introducing a uniform specific excise tax on tobacco products, introducing a specific excise tax on alcoholic beverages (based on ethanol content) and introducing a specific excise tax on sugar-sweetened beverages (based on sugar content),” Mr Agyeman-Manu said.
The proposal presented by the ministry also calls for the introduction of a specific excise tax that would increase cigarettes by GH¢6; alcoholic beverages by 20 per cent while increasing taxes on sugar-sweetened beverages by introducing a specific excise tax to increase the retail price by 20 per cent.
Mr Agyeman-Manu said the proposals also satisfied the ECOWAS directive of a specific minimum excise tax of at least $0.40 per pack and generated an additional GH¢131 million in revenue, while reducing consumption by 26.6 per cent in 2023, and averting 34,600 deaths during the lifespan of Ghanaians living now.
“Introducing a specific excise tax to increase retail price of alcoholic beverages by 20 per cent will generate an additional GH¢2.4 billion in excise tax revenue and reduce consumption by 7.6 per cent in 2023, and avert more than 44,000 deaths over 100 years,” the ministry proposed.
“Increasing taxes on sugar-sweetened beverages by introducing a specific excise tax to increase retail price by 20 per cent in the country will generate an additional GH¢1 billion in excise tax revenue and reduce consumption by 23.9 per cent in 2023, and avert 155,000 deaths over 100 years,” the proposal further indicated.
The health ministry believes that the proposed tax structures may incentivise product reformulation and new marketing practices, leading to lower tax revenues and, possibly, larger declines in consumption which would yield larger public health gains compared to the scenarios presented above.
Mr Agyeman-Manu described the NCD burden as an alarming situation that required the ministry to step up the provision of quality preventive, promotion, diagnostic, curative, rehabilitative and palliative care services for these diseases.
“The financing of NCDs, therefore, requires additional resources beyond the traditional annual government budget and this calls for exploring innovative financing to increase domestic resources,” he stressed.