The Food and Beverages Association of Ghana (FABAG) has made a strong appeal to the government, particularly the Minister of Finance, Dr. Cassiel Ato Forson, to abolish the excise tax on fruit juices and other levies that are negatively impacting local industries.
The association argues that eliminating these taxes, which were introduced under the previous Akufo-Addo administration, is crucial for revitalizing domestic production and increasing overall tax revenue for the state.
FABAG has raised serious concerns over the excise tax imposed on sweetened and fruit drinks under the Excise Duty (Amendments) Act 2023 (Act 1093). The association asserts that this tax has had a crippling effect on the local manufacturing sector, making it increasingly difficult for Ghanaian fruit juice producers to compete in both local and international markets.
According to FABAG, the excise tax specifically targets locally produced fruit juices and sweetened beverages, leading to a significant decline in sales and stifling growth within the industry.
A recent analysis conducted by FABAG has revealed that since the introduction of the excise tax, sales in the fruit juice manufacturing sector have plummeted by a staggering 50%. This sharp decline has not only affected manufacturers but has also undermined the government’s revenue expectations. Instead of boosting tax revenue, the excise duty has inadvertently resulted in lower net earnings for the state, as struggling local manufacturers contribute less due to the drop in production and sales.
Moreover, FABAG has highlighted the heavy tax burden already imposed on manufacturers, including import duties, Value Added Tax (VAT), ecological levies, and multiple charges at ports and on shipments. The accumulation of these taxes has placed severe financial strain on the industry, reducing the ability of local businesses to expand, innovate, and remain competitive. FABAG has stressed that the high taxation regime is making it increasingly difficult for local manufacturers to operate profitably.
Association Warns of The Impact of These Taxes
The association has also warned that the impact of these taxes extends beyond revenue losses. The burden has resulted in forced labour retrenchments, inflated production costs, and a diminished capacity for Ghanaian businesses to compete with imported fruit juice brands. As a result, many manufacturers are either downsizing or shutting down operations entirely, leading to job losses and economic stagnation.
Furthermore, FABAG has underscored the long-term consequences of the excise tax, arguing that it is deterring investment in the fruit juice manufacturing sector. Local and foreign investors are hesitant to commit resources to an industry that is being stifled by excessive taxation, resulting in wasted investment potential. The association believes that if the government does not take immediate action to reverse the excise tax, the industry may suffer irreversible damage, ultimately leading to higher unemployment and reduced economic activity.
In light of these challenges, FABAG is calling for the immediate removal of the excise tax on fruit juices. The association firmly believes that reversing this tax policy will rejuvenate the local industry by allowing manufacturers to increase production, boost sales volumes, and enhance their ability to compete in the market. Additionally, removing the excise tax would stimulate business growth, leading to higher overall tax contributions from various sources, including withholding taxes, corporate income tax, and VAT.
FABAG has also emphasized the broader economic benefits of abolishing the excise tax. By alleviating the financial strain on fruit juice manufacturers, the government could create new job opportunities, increase Social Security and National Insurance Trust (SSNIT) contributions, and foster a more resilient and competitive local manufacturing sector. The association believes that a more favorable tax structure would encourage investment, drive innovation, and contribute to Ghana’s broader economic development goals.
FABAG has expressed its willingness to work closely with the government to achieve these economic objectives. The association has urged the Ministry of Finance to engage stakeholders in a comprehensive review of the current tax regime to identify more sustainable ways of generating revenue without crippling local industries. By taking decisive action to remove the excise tax on fruit juices, the government has the opportunity to support local businesses, create jobs, and ultimately improve the nation’s economic outlook.
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