The Government of Ghana has imposed a further 25% tax on tobacco products to enable it generate enough revenue to pursue its developmental projects and to also serve as a disincentive to reduce its consumption in the country.

With Parliament’s approval of the Excise Duty (Amendment) Bill, 2015 into law, the new duty rate is 175% of the ex-factory price from an initial 150%.

That means excise duty on cigarettes and cigars which were pegged at 150% of the ex-factory price per the dictates of the Excise Duty Act, 2014 (Act 878) will now attract a further 25% tax to bring the total tax on the commodity to 175%, according to the amended law.

Finance Minister, Seth Terkper, who was present during the passage of the amended law, told members of the legislature that the country’s Excise tax as a percentage of cigarette price is one of the lowest in the region, hence, the increment to bring it in tandem with the average for Africa.

That notwithstanding, he said the initiative was meant to reduce the consumption of tobacco and its related health hazards.

Chairman of the Finance Committee and MP for Ketu North, James Klutse Avedzi in presenting the committee’s report on the amended bill told the House the bill was one of the revenue bills proposed in the 2015 Budget Statement which should have come into effect in January, 2015.

He said the delay in the presentation of the Bill negatively affected the tax revenue generation of the country and a further delay in the implementation “could have adverse impact on revenue performance and the Finance Ministry’s ability to meet its 2015 revenue projections.”

It is however, not clear how much the government is seeking to generate from the initiative as consumption of cigarette and cigar continue to increase on monthly basis.