Don’t impose sugar tax on beverage companies — AGI urges govt ahead of 2025 Budget statement

The Association of Ghana Industries (AGI) has asked the government to resist any temptation to impose tax on beverage companies that use sugar in their production processes in the upcoming 2025 budget statement, scheduled for presentation to Parliament in March this year.

It follows information gathered by the association on the plan by the government to impose a new tax on beverage companies called “sugar tax” to discourage excessive sugar consumption and mitigate its adverse health impacts on society.

However, the AGI maintained that a sugar tax on beverages would have far-reaching implications for the beverage industry and the economy at large.

It is part of a litany of proposals made by the association and its members ahead of the 2025 budget statement with others, urging the government to ensure macroeconomic stability, stop cedi depreciation against the major currencies, tame inflation and interest rate, and rationalisation of the tax system to make them conducive for businesses.

Tax rationalisation

The Chief Executive Officer (CEO) of the association, Seth Twum-Akwaboah, who made this known at a press conference in Accra on February 21, stated that the 2025 budget should be used to rationalise the country’s tax system, especially the Value Added Tax (VAT) regime.

“The VAT system is a typical example where the straight levy system is not functioning well with us. So, that was one of the proposals we made. We also had the zero VAT system on textiles, and later it was extended to sanitary pads.

“We think that there are few other products that can be looked at like diapers, and others where we have excess local capacity. But because of the unfairness in trade, people are bringing these goods and they are smuggling them in. They are not paying the VAT. They come in cheaper and compete unfairly with our members,” he said.

Zero VAT

The CEO said the zero VAT system could be reexamined and refocused on specific products in the upcoming 2025 budget statement.

He said there was a need to review the entire tax system, excluding VAT, to ensure its effectiveness, because the numerous taxes imposed on imported raw materials were excessively high.

Mr Twum-Akwaboah urged the government to reexamine the 57 per cent tax on imported raw materials and remove the COVID-19 levy, as it has outlived its purpose.

“There are some intentions of the government to impose some taxes on the beverage companies. We think that the decision to impose a tax on beverage companies needs to be looked at in a very pragmatic way, because if the intention is to protect our health by reducing sugar consumption and imposing taxes, then it must be extended to all other products that have sugar, otherwise, it becomes discriminatory.

“So, we would not like to see a new tax imposed on the beverage companies, simply because you want to reduce sugar intake. In practice, it does not work that way, and it is one of the proposals we have made strongly to the government,” he added.

 
Printing Challenges

The AGI CEO said the government must also use the budget to address key challenges affecting the growth of the printing industry in the country.

He said the government has imposed a tax on imported raw materials for printing, yet grants exemptions to finished printing textbooks entering the country.

He said the tax exemption on imported finished printing textbooks incentivises printing over local production.

“So, it makes it easier to print than to produce. Here, it makes it easier to import than to produce, and we think that it is a problem in the law that has to be looked at,” he added.

High cost of power

The President of AGI, Dr Humphrey Ayim-Darke, said the businesses expect the government to use the budget to announce a reduction in what they described as the high cost of power for industries to be more competitive.

He explained that the current electricity tariff structure where industries were made to subsidise residential consumers must be reversed.

“The cost of electricity remains a major challenge and is prominent among the challenges that businesses in the country are facing. We want VAT rationalised, the COVID levy, emission levy, the various taxes that the government had promised to take off in its manifesto be removed,” he said.

He added that the government must also ensure that there was access and high cost of capital was addressed to enable businesses to be competitive, expand and create jobs.