On 26 January 2022 the Vision for Alternative Development (VALD), a Ghanaian NGO, released a Study Report on Economics of Tobacco in Ghana. The report recommended the re-introduction of a specific tax in addition to the ad-valorem tax system and suggested that more public education is required on the dangers of tobacco use.
The report noted that eight million lives are lost globally each year due to tobacco use, at a cost of USD 1.4 trillion to the world economy. In Ghana there are more than five thousand deaths annually as a result of tobacco use and the cost to Ghana is around GHC 97 million each year. In Ghana more than 800,000 people smoke regularly and by 2025 that number is estimated to rise to 1.7 million.
The report noted that although Ghana has ratified the World Health Organisation Framework Convention on Tobacco Control (WHO FCTC) it has not yet adequately implemented the provisions of the Convention.
The Public Health Act (Act 851), passed in 2021, was the first legislative document regulating tobacco trade and use, but the public is generally not aware of that law or its provisions. The provision for cessation centres to be established in the regions and districts for people wanting to give up smoking has not yet been implemented.
The report considered that relevant research is required to put together evidence that can form a basis for the development, implementation, and evaluation of measures on tobacco control. Evidence provided can help the government to fulfil the objectives of Ghana’s Tobacco Control Act 2012 and Tobacco Control Regulation 2016.
The study notes that manufactured cigarettes account for more than 90% of tobacco products used in Ghana. There is a large illicit tobacco market, amounting to 20% to 30% of the total market.
Ghana has 11 taxes on tobacco products charged on an ad-valorem basis taking the cost, insurance, and freight (CIF) valuation as the basis for determining the tax and applying a tax rate of around 200% of CIF. Although this appears to be a high rate of tax, the nature of the ad valorem structure means that the tax charged represents a low proportion of the retail price.
The tax share of the total price is below the 70% to 75% level recommended by the WHO, and tax revenue from the tobacco industry has undergone a moderate decline over time.
