Reverse ‘Crushing’ Excise Tax — FABAG Appeals to Government

Reverse ‘Crushing’ Excise Tax — FABAG Appeals to Government

The Food and Beverages Association of Ghana (FABAG) has urged the government to reverse the excise duty on fruit juices and other “nuisance taxes” to alleviate the burden on the domestic manufacturing sector.

According to FABAG Chairman, John Awuni, eliminating these taxes would stimulate local production and enhance revenue collection by the Ghana Revenue Authority (GRA).

Impact of Excise Taxes

In 2022, the government introduced the Excise Tax (Amendment) Bill, imposing a 20% excise tax on locally produced mineral water and beverages, along with a 5% special levy on pre-tax profits, referred to as the Growth and Stability Levy.

Mr. Awuni explained that the excise tax on sweetened and fruit drinks, enforced under the Excise Duty (Amendments) Act 2023 (Act 1093), has severely impacted local manufacturers. The policy has led to declining sales, reduced working capital, and job losses, further weakening Ghanaian products’ competitiveness in the international market.

Budget and Policy Expectations

FABAG’s appeal comes ahead of the 2025 Budget presentation by Finance Minister Dr. Cassiel Ato Forson on March 11, 2025. The budget is expected to outline Ghana’s economic transformation strategy in line with President John Mahama’s vision.

The government has indicated that policy decisions in the upcoming budget will be guided by recommendations from the National Economic Dialogue, scheduled for March 3-4, 2025.

Declining Revenue and Industry Struggles

FABAG’s analysis of the excise tax’s effects reveals that instead of increasing revenue, the policy has resulted in:

• A 50% drop in sales across the local industry.
• A decline in net revenue to the government rather than an increase.
• Severe financial strain on local manufacturers due to excessive taxation.

Mr. Awuni highlighted that manufacturers currently pay multiple taxes on raw materials, including:

• Import duties, VAT, ECOWAS Levy, network charges, inspection fees, and COVID-19 Health Recovery Levy.
• Ghana Shippers Authority SNF fee, Ghana Export-Import Bank (EXIM) levy, African Union Import Levy, and fumigation fees at the port.
• Corporate income tax, VAT on sales, withholding taxes, and PAYE/SSNIT contributions.

These cumulative taxes, he stressed, are crippling the survival and competitiveness of local fruit juice producers.

Call for Immediate Tax Reversal

FABAG strongly believes that reversing the excise tax will:

• Ease financial pressure on local manufacturers.
• Stimulate industry growth and job creation.
• Boost government revenue through higher sales volumes.
• Increase tax contributions from corporate income tax, VAT, PAYE, and SSNIT payments.

“We are committed to supporting the government in achieving its objectives and urge immediate action to reverse this tax in the first budget statement,” Mr. Awuni concluded.