The Food and Beverages Association Ghana (FABAG) has appealed to government to reverse the excise duty on fruit juices and other "nuisance taxes" to ease the current burden on the domestic manufacturing industry.
The Chairman of the Association, John Awuni, said the reversal of these taxes would boost domestic production and increase revenue mobilisation by the Ghana Revenue Authority (GRA).
In 2022, the government introduced the Excise Tax (Amendment) Bill 2022, slapping a 20 per cent excise tax on locally produced mineral water and beverages and, a further five per cent special levy on profit before tax on all companies to be known as growth and stability levy.
He explained that the introduction and imposition of the 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 products.
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Budget
The call comes as the Minister for Finance, Dr Cassiel Ato Forson, prepares to present his first budget to Parliament on Tuesday, March 11, 2024.
The budget will provide a full breakdown of the economy and the government's policy proposals to reset and facilitate Ghana's economic transformation agenda in line with Mahama's vision.
The government has indicated that the policies to be announced in the budget will be informed by recommendations from the National Economic Dialogue, which will take place a week earlier, on March 3rd and 4th, 2025.
"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 significantly. Sales have dropped by over 50%. Net revenue generated to government has in fact reduced, not increased.
The local industry has been severely crippled since the introduction of this Excise Tax, especially as the local industry is already overburdened with an avalanche of taxes," he said.
Mr Awuni explained that currently, taxes paid by manufacturers on their raw materials for production include: import duty, import VAT, ECOWAS Levy, network charge, network charge VAT, Ghana Shippers Authority SNF fee, import NHIL, network charge NHIL, and GHS disinfection fee.
The rest are: MoTI-IDF fee, special import levy, Ghana Export-Import Bank (EXIM) levy, Ghana Education Trust (GET) Fund Import, network charge GET Fund levy, inspection fee, African Union Import Levy, Covid-19 Health Recovery Levy, 15% VAT on sales, and container fumigation fees at the Port.
All these taxes, he said, were stifling the survival, competitiveness, growth, and sustainability of the domestic fruit juice industry.
“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,” he said.
“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,” Mr Awuni added.