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Ashanti Regional Minister meets protesting Kumasi traders today

By Vincent Ashitey
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A meeting between the Ashanti Regional Minister, Simon Osei Mensah and traders of the Adum Business Community is expected to come off today, Thursday, October 13, 2022.

This comes on the back of ongoing protest by the traders, who are lamenting what they refer to as high taxes on their businesses.

In a press conference held the Kumasi Business Community said the current tax regime for Fast Moving Consumer Goods (FMCG) is a recipe for the collapse of businesses in that sector, and can have dire consequences on the economy, if not reviewed.

The group is, therefore, asking the government to collect all taxes on such goods at the point of entry or domestic factories to save the industry from collapse.

“We strongly recommend that government adopts more sustainable and business friendly tax policies that will help government optimize revenue mobilization whilst promoting business growth,” Mr Charles Kusi, Executive Secretary of the group, said at a news conference in Kumasi.

It followed the closure of shops in the central business district of Kumasi by traders since Monday, October 10, to protest the unfavourable tax regime and the free fall of the Cedi against the major foreign currencies.

Mr Kusi said the government’s inability to achieve its revenue target was an indication that the fundamental challenges with the Value Added Tax (VAT) needed to be addressed as a matter of urgency.

He said the tax structure and its administration did not support the FMCG market, adding that, the policy introduced multiple taxations for each item as they travelled along the distribution channel.

He added that high competition coupled with high non-VAT compliance, made charging the VAT a disincentive to the few VAT compliant firms.

He noted that the FMCG market was one of the largest markets with the longest supply chain as well as high revenue turnover in Ghana, hence the assumption that it was a profitable market.

This, he said, had created a certain impression to governments upon governments as the first to go for revenue mobilization.

“Unfortunately, the reality is that FMCG market has one of the lowest gross margins across all other markets in Ghana and even beyond,” he explained.

He mentioned some of the challenges confronting the sector such as high and unrealistic tax system, excessive cost of borrowing, low gross margin, high inflation, and forex hikes.

Concerns have been raised constantly on various government platforms on the devastating effects of the VAT system to business survival and the negative impact on the economy, but nothing has been done to address the situation, he pointed out.

“We have demonstrated to government that the four per cent VAT flat rate does not sync with the dynamics in the FMCG sector and recommended tax policies that will enhance revenue mobilisation whilst promoting self-compliance.”

He added that, “we were so optimistic that government was going to heed our recommendations in last year’s budget only for us to wake up to another complex VAT regime,” he lamented.

Mr Kusi said the traders remained resolute in pressing home their demands for their concerns to be addressed through legitimate means, including the closure of shops and demonstrations.