Accra Brewery Limited (ABL) has urged the Ghanaian government to delay implementing newly approved increases in excise duty on locally manufactured beer. The company warns these measures could negatively affect jobs, investment, and businesses throughout the brewing value chain.
The Country Director for ABL, Thatokuhle Hlongwa, made this call during the Association of Ghana Industries (AGI) 2nd Quarter Business Barometer presentation in Accra. He stressed the need for additional consultations to properly assess the likely impact of the new rates on manufacturers, consumers, and the wider economy.
These proposed tax reforms are significant for Ghana's industrial sector and public finance. The government aims to boost revenue collection to address fiscal challenges and reduce its budget deficit. However, industry players like ABL argue that poorly implemented tax changes can stifle growth and undermine other economic objectives, such as local content promotion.
Mr. Hlongwa stated, “Changes to the excise taxation have implications that extend far beyond the taxes paid by the manufacturers.” He highlighted that the brewing industry supports local manufacturing, agriculture, job creation, procurement, and distribution across Ghana. This statement underscores the interconnectedness of the industry with broader economic activity.
The implications of these tax adjustments are far-reaching. If implemented as planned, production costs for brewers will likely rise, potentially leading to higher consumer prices for beer. This could reduce demand, affecting sales volumes for breweries and their distributors. Reduced demand and higher costs could then lead to decreased investment in the sector and potential job losses, particularly in areas reliant on local raw material sourcing like cassava farming.
Under the approved reforms, excise duty on locally manufactured beer is set to increase from 32.5% to 40%. Beer products with high local raw material content, such as cassava-based beer, face an even sharper rise, from 10% to 25%. In contrast, the rate on imported beer will remain unchanged at 47.5%, potentially altering market dynamics.
ABL is particularly concerned about the proposed increase on beer made with significant quantities of locally sourced raw materials. The jump from 10% to 25% could severely impact farmers and businesses within the domestic agricultural value chain. This specific concern highlights a potential conflict between revenue generation and supporting local agriculture, a key government policy objective.
Mr. Hlongwa clarified that ABL's position is not opposition to taxation or the government’s revenue mobilisation agenda. He asserted, “We are not against taxation. Absolutely not. But what we are doing is, let’s have a further dialogue, a further stakeholder engagement, allow us to dialogue further.” This indicates a desire for collaborative policy-making rather than outright resistance.
The call for further dialogue and a postponement of implementation aims to allow both government and industry to thoroughly assess the economic implications. Such discussions could lead to mutually agreeable measures that protect investment, employment, local manufacturing, and consumer welfare. The outcome of these discussions will be closely watched by other manufacturing sectors facing similar tax pressures.
The government's response to ABL's plea will signal its approach to balancing fiscal needs with industrial growth and job protection. A balanced approach is crucial for maintaining investor confidence and ensuring sustainable economic development in Ghana. The final decision will impact thousands of jobs and millions of Ghana cedis in investment.