The Food and Beverages Association Ghana (FABAG) has issued a public appeal to the Honourable Minister of Finance and the government to eliminate the Excise Tax on fruit juices and other recently imposed taxes under the current administration.
According to the Association, this tax removal is vital to stimulating local production and increasing revenue mobilization by the Ghana Revenue Authority (GRA).
In a statement released to the press, FABAG argued that the tax burden on the local fruit juice and sweetened beverage industries has become unsustainable.
They assert that the introduction of the Excise Tax on these products under the Excise Duty (Amendments) Act of 2023, particularly on locally manufactured fruit juices, has severely disrupted the industry’s stability.
“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”.
Food and Beverages Association Ghana (FABAG)
The association conducted a cost-benefit analysis that indicated the government and the Ghanaian economy had suffered losses since the introduction of the tax.
According to FABAG, local industry sales have plummeted by over 50%, and net revenue generated for the government has not increased as expected.
The association further points out that local producers are already burdened with a multitude of taxes, making it even harder for the sector to thrive.
Ghanaian local manufacturers face a complex web of taxes on their raw materials.
“Currently, manufacturers pay the following taxes on their raw materials for production: Import Duty, Import VAT, Ecowas Levy, Network Charge, Network Charge VAT, Network Charge COVID-19 Health, Ghana Shippers Authority SNF Fee, Import NHIL, Network Charge NHIL, GHS Disinfection Fee, 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.”
Food and Beverages Association Ghana (FABAG)
Accordingly, the Association stressed that the 15% VAT on sales and additional charges, such as container fumigation fees at the Port, further weigh on an already struggling industry.
Tax Overload Threatens Growth of Local Sector
Furthermore, FABAG claimed that the overwhelming tax burden is stifling the growth, competitiveness, and survival of the domestic fruit juice manufacturing sector.
The association insists that the taxes are creating a dire situation, leading to various economic issues.
“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 forced labor retrenchment; High cost of product in the face of the external market (export) opportunities; Inability to compete with imported products of similar type and content because of a very collapsing tax regime.”
Food and Beverages Association Ghana (FABAG)
The current tax structure, according to FABAG, has crippled local production, making it difficult for Ghanaian products to compete internationally.
Additionally, the increase in production costs has made it harder for manufacturers to meet export demands, thereby limiting opportunities for the country’s growth on the global stage.
However, the association remains optimistic about the future of the sector if the tax is reversed.
FABAG believes that removing the Excise Tax could trigger a wave of positive changes for local manufacturers.
According to the Association, the removal would not only relieve the tax burden on producers but also stimulate economic growth by creating new jobs and increasing government revenue through higher sales volumes.
“We are keen in supporting the government achieve its key objectives and targets for the year and beyond,” FABAG noted, emphasizing their readiness to partner with the government in meeting their economic goals.
FABAG strongly urged the government to include the reversal of the Excise Tax in its first budget statement, which would ease the pressure on local industries and pave the way for long-term growth.
The association believes this move will boost the fruit juice industry, generate more income for the country, and support local manufacturers in their efforts to regain competitiveness both at home and abroad.
FABAG’s call to action highlights the urgency of revising the tax policy to ensure the survival and prosperity of the fruit juice sector in Ghana.
The reversal of this tax could be the turning point needed for the industry to regain its footing and contribute meaningfully to the economy.
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