The Food and Beverages Association of Ghana (FABAG) has urged Finance Minister Dr. Cassiel Ato Forson to scrap the Excise Tax on fruit juices and other levies introduced by the previous NPP administration.
FABAG emphasized that eliminating these taxes in the first budget of the Mahama administration would be crucial for boosting domestic production and enhancing revenue mobilization by the Ghana Revenue Authority (GRA).
“The imposition of the burdensome Excise Tax on sweetened and fruit drinks under the Excise Duty (Amendments) Act 2023 (Act 1093), particularly on locally produced beverages, has had a devastating impact on local manufacturing. This has led to job losses, reduced sales, constrained working capital, and weakened the international competitiveness of Ghanaian fruit juices and sweetened beverages,” the association stated.
FABAG further noted that a cost-benefit analysis of the Excise Duty on domestic industry performance since its implementation shows significant economic losses.
“Sales have plummeted by over 50%, and net revenue to the government has declined instead of increasing. The local industry, already struggling under a heavy tax burden, has been severely affected by this policy,” the statement added.
Below is the full statement…
REMOVE EXCISE TAX ON FRUIT JUICES AND OTHER NUISANCE TAXES TO BOOST LOCAL PRODUCTION AND TAX REVENUE -FABAG
The Food and Beverages Association Ghana (FABAG), would like to appeal to the Honourable Minister of Finance and for that matter the government to remove the Excise Tax on fruit juices and other nuisance taxes that were introduced by the NPP government. The removal of these taxes in the Government’s first budget statement is very key to boosting domestic production and increased revenue mobilization by the GRA.
The introduction and imposition of the obnoxious EXCISE tax on sweetened and fruit drinks under Excise Duty (Amendments) Act 2023 (Act 1093) especially on locally produced fruit juices and sweetened beverages has had a devastating negative effect on local manufacturing with a multiplier effect on employment levels, sales turnover, working capital and international market competitiveness of Ghanaian fruit juices and sweetened beverages.
A brief Cost-benefit analysis of the Excise Duty by FABAG on domestic industry capacity and productivity since its introduction indicates that the government and for that matter the Ghanaian economy has lost so much since its introduction. Sales have dropped by over 50% . Net revenue generated to government has in fact reduced and not increased. The local industry has severely been crippled since the introduction of this Excise Tax more especially as the local industry is already overburdened with an avalanche of taxes.
Currently, manufacturers pay the following taxes on their raw materials for production:
1. Import Duty,
2.Import VAT,
3.Ecowas Levy,
4. Network Charge, Network Charge VAT, Network Charge COVID-19 Health,
5. Ghana Shippers Authority SNF Fee,
6. Import NHIL, Network Charge NHIL,
7. GHS Disinfection Fee,
8 MoTI-IDF Fee,
9. Special Import Levy,
10. Ghana Export-Import Bank (EXIM) Levy,
11. Ghana Education Trust (GET) Fund Import,
12. Network Charge GET Fund Levy,
13. Inspection Fee,
14. African Union Import Levy
15. COVID-19 Health Recovery Levy. The 15% VAT on sales cannot be ignored in this argument.
16. Container fumigation fees at the Port.
All these taxes are already stifling the survival, competitiveness, growth and sustainability of the domestic fruit juices industry.
Indeed, the Ghanaian manufacturing sector of this industry is faced with extra ordinary high taxes which hinder competitive production and distribution. Investors in the industry are constantly faced with the challenge of wasted/ idle investment capacity, gradually wading into investment waste without any hope for the future and this has consequently led to (1) forced labour retrenchment; 2. High cost of product in the face of external market ( export) opportunities; 3. Inability to compete with imported products of similar type and content because of very collapsing tax regime.
FABAG sincerely believes that the immediate reversal of this Excise Tax will ease the current burden on the domestic manufacturing fruit juices industry and kick start growth and development in that sector with its attendant benefits such as increased revenue for the government through high sales volume of players in the sector, increased employment and consequently high PAYE and SSNIT payments, increased payment of withholding taxes, corporate income tax, VAT and related taxes.
We are keen in supporting the government achieve its key objectives and targets for the year and beyond.
Counting on your full understanding of the current predicament of the local fruit juices manufacturing sector and reverse this tax in your first budget statement.