Government urged to reduce Excise Rate

The Chairman of the Board of Directors of the British American Tobacco Ghana Limited, Dr Kobina Richardson, has called on the government to reduce the country's excise duty to enable the company to compete fairly, remain viable, protect jobs and generate revenue fot the government. He was speaking at the 50th annual general meeting of the company in Takoradi.

Dr Richardson said the wide disparity between Ghana's excise duty rate of 140 percent ex-factory price against 8 percent to 30 percent in neighbouring countries continued to be the "main driver" of smuggled cigarettes into the country with negative effects on the company and the economy.

He said the government rightly acknowledged in its 2003 budget statement that smuggling accounts for as much as 10 percent of the cigarette market in Ghana.

Dr Richardson said this led to an estimated revenue loss of 25 billion cedis in unpaid taxes. He said the company's sales volume declined by 9 point 7 percent on the previous year performance due to the difficult economic conditions in Ghana and partly to the unfair competition from low priced smuggled cigarette.

Dr Richardson said the company's contribution to government revenue from Excise duty and VAT amounted to 174.8 billion cedis, representing a 15.9 percent increase in 2001. Dr Richardson said operating profit increased from 27.6 percent to 44.8 billion cedis due largely to the company's pricing policy and effective management.

Mr. James Idun-Ogde, outgoing Managing Director of the Company, said the factory upgrade programme started in 2002 involving installation of modern and faster equipment, is about 95 percent complete. He said after the last equipment is installed by the middle of June, the quality of the company's products would improve.

Mr Idun-Ogde said the company intends to sustain its Youth Smoking Prevention Campaign, which was launched two years ago and expressed the hope that the government would pass a law banning cigarette sales to the under-aged.

He said the company's investment in national education development involving award of scholarships, provision of funds for university projects and the establishment of a research chair during 2002 totalled 420 million cedis.

Mr Idun-Ogde said beneficiaries included Kwame Nkrumah University of Science and Technology, which received 150 million cedis for the establishment of a research chair in agro-forestry at its Institute of Renewable Natural Resources.

He said to commemorate the company's golden jubilee it donated 100 million cedis seed capital to the Western Regional Administration for the establishment of an Educational Trust Fund for the region aimed at improving educational standards. Mr Idun-Ogde said 100 million cedis, was also donated to the University of Ghana Jubilee Hall Fund.