Government has increased the excise duty on tobacco from 150% to 175%, the Finance Minister Seth Terkper has revealed.
Terpker said this on Wednesday when he presented the 2015 Budget Statement and Economic policy on the floor of Parliament.
He said : “Ghana’s excise tax as a percentage of cigarette prices is one of the lowest in the region and it has been estimated that the excise tax as a percentage of retail price is 14 percent while the average for Africa is 33 percent.”
He noted that the increment will help restrict and reduce the consumption of tobacco and its related health hazards.
The excise tax is currently pegged at 70 percent of the retail price hence the duty rate must be adjusted to attain that mark.
Meanwhile some policy critics have argued that if taxes on tobacco become too restrictive on industry, it will lead to a growing underground economy for tobacco products that may be counterfeits.
IMANI Ghana in a communique issued ahead of the budget reading argued that an increment would expose the country to illicit trade in tobacco products seeing as the excise rates in its neighbouring countries such as Togo, Burkina Faso and Cote D’Ivoire are lower.
“It will defeat all our public health campaigns as one cannot guarantee the contents of illicit tobacco. Tobacco industries play a major role in African economies as far as their tax contributions are concerned and thus their inputs in these discussions must be encouraged” the group argued.