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Tobacco Smuggling Cost Gov't Over Us$3.5m Annually(Ghanaian Chronicle Via Thomson Dialog NewsEdge) SMUGGLING IN Ghana has been on the ascendancy irrespective of measures introduced by CEPS and the Government to curb it. Smuggling of contraband cigarettes into the country cost the Government over US$3.5 million revenue every year. Smuggling of cigarette products has become one of the stumbling blocks to the Government's plan to generate more revenue for the state because taxes and levies supposed to accrue on these goods are not paid. Smuggling of cigarette products into Ghana is on the increase just like what is happening in the textile trade. As at the end of 2005, the market share for contraband cigarettes was 6%. However, this has increased by about 200% to 17.5%. The market share for BAT has therefore reduced from86% to 80%. Target Link, a local importer of Capital and Gold Seal has 2.5%-share. Bond Street, popularly known as bond is the leading contraband cigarette with a market share of 10% out of the 17% contraband cigarette share. British America Tobacco (BAT) last year contributed over $30 million to the economy through taxes and levies paid on cigarette products it produces in the country. The $30 million covered 90% of the market and therefore Government lost taxes on the rest (10%) to smuggling of cigarette products into the country estimated to be about $3.5 million. About 160 million sticks of cigarette are smuggled into the country every year without payment of duties therefore leading to those huge losses to Government. Reasons offered for this state of affairs were the porous nature of the country's borders and the non-enforceability of laws especially on smuggling. However, with education and enforceability of laws, the losses would be curtailed to its barest minimum. The main entry point for the contraband goods is the Eastern frontier where cigarettes and textiles are smuggled through border towns like Aflao, Kpalime, Tindjasi, Sankasi/Bawku, Bole/Tsatsi borders. However, the Western frontier had no problem with smuggling because prices of such products are already high in Ivory Coast and some part of Burkina Faso. It is because of these problems that CEPS has introduced programmes and advertisements on radios to educate people to patronise legally registered products manufactured in Ghana. The growth of tobacco demand in Ghana has been stable recording a 1.1% growth per annum last year. This means there was a decline in the smoking incidence in the country and this development is attributed to social stigmatisation of smoking cigarette and the high level of taxes. The profit generated from the sale of one cigarette, 60% is taxed and therefore reducing the profitability of the company. Meanwhile, BAT's turnover for the half year ending June 30, 2006 was 105,344 million which represents a 3.26% increase over the same period in 2005. Although BAT recorded an expense of 678 million compared to an income of 1,446 million, the company's net profit was up by 8.58% to 16,432 million over the same period last year. BAT in 2004 contributed 280 billion cedis to Government's revenue base. It currently employs 252 full time employees and has 1,300 registered tobacco farmers. These farmers in 2004 had income of approximately 22.2 billion cedis. BAT has 13 distributors, 1,791 wholesalers and 20,000 retailers who earned 100 billion cedis in 2004. Growing 80% of leaf requirement locally has saved Government an average of USD1.7 million per annum in import costs. BAT has also planted 4.7 million hectares of trees on 3,788 hectares of land, supported various communities and individuals to plant more than 2.1 million trees and the afforestation programme to protect the Weija Lake. A total of 530 million cedis has so far been donated to educational institutions in the country including the University of Ghana. Distributed by AllAfrica Global Media. (allafrica.com) Copyright 2006 Ghanaian Chronical. Distributed by Allafrica Global Media. |