The Ghana Union of Traders Association is up in arms against the Association of Ghana Industries (AGI) over the decision by the Ghana Revenue Authority (GRA) to scrap the benchmark values on some 32 goods from today, Monday, November 15, 2021.
GUTA has held a press conference Monday, demanding an immediate reversal of the decision to scrap the 50 per cent and 30 per cent benchmark values granted businesses in the country.
The benchmark value policy was introduced in 2019 by the government to save businesses from total collapse and rejigged in 2020 to give respite to businesses badly hit by the covid-19 pandemic.
As such, the importation of certain goods and products including automobiles, beverages and others were given substantial discounts on imports.
However, the Ghana Revenue Authority (GRA) revealed recently in a release that it has withdrawn the policy effective today, 15 November to shore up its struggling revenue mobilisation efforts.
Unhappy with the sudden turn of events, GUTA said the move by the GRA has been instigated by the AGI – calling the Association a hypocrite.
“We should be very much surprised if the government succumbs to this treacherous and diabolic request of the AGI who are trying to lobby against this most acceptable flagship policy of the government to destroy the distribution sector of the economy…the irony, hypocrisy and absurdity here is that whiles the AGI is calling for the abolishment of the 50% reduction of the benchmark value policy for the trading community, they are on the other hand crying to and pleading with the government to maintain the same 50% benchmark value reduction for their imports. Members of the Press, you can clearly see the double standards here.
“In effect what the AGI is telling the government is that their goods are very expensive as compared to that of their competitors in the other parts of the world and that the government should surcharge the people of Ghana with high import duties to bridge their extortionist prices which have come about as a result of their own inefficiencies and total lack of understanding of modern technology in manufacturing,” GUTA blamed AGI in a press statement.
Read the full statement by GUTA below.
PRESS STATEMENT ISSUED BY THE GHANA UNION OF TRADERS’ ASSOCIATIONS (GUTA) ON THE 50% REDUCTION OF THE BENCHMARK VALUE POLICY HELD ON MONDAY, 15TH NOVEMBER, 2021.
Members of the Press, Distinguished Ladies and Gentlemen. We find it very necessary to invite the media here this morning to state our position on the 50% reduction of the benchmark value policy of the government, which was introduced in 2019 to save businesses from total collapse and wish to strongly caution against its review as some lobbyists are seeking.
Ladies and Gentlemen, we want the world to know and understand that the 50% benchmark value reduction did not come out of the blue. For years, businesses in the country have been crying over high rate of import duties, other taxes, fees and charges which were ruining businesses in the country.
GUTA, ASSOCIATION OF GHANA INDUSTRIES (AGI), GHANA NATIONAL CHAMBER OF COMMERCE AND INDUSTRY (GNCCI) and others, have all been complaining bitterly about high cost of doing business in the country, which in effect have become very unbearable.
For the importing community, duty payments, Value Added Tax (VAT) and other port fees and charges cumulating to about 55% and 65% of the invoice values for products with import duty rates of 20% and 35% respectively.
After persistent agitations by members of the business community, the government heeded, but was challenged in reducing the duty rate due to the ECOWAS Common External Tariff. The government then decided to discount these invoice values that were to be guided by the GRA Customs own benchmark values. This is what has become or termed to be known as the 50% reduction of the benchmark value policy.
This innovative and good policy has since its introduction been enjoyed by all sectors of the business community including the AGI, who imports over 90% of their manufacturing inputs into the country. Since then, the government has been exceeding its revenue targets.
The lesson here is that when taxes are affordable it raises level of compliance, which goes a long way to minimize smuggling and other corruptible practices. It is worthy to state herein that against all odds, the benchmark value was a mitigating factor during the outbreak of the COVID-19 pandemic in 2020 and beyond. In spite of the adverse effects of the pandemic where global commodity prices have gone up astronomically with extremely high freight charges, businesses have been able to contain and sustain prices as a result of this innovative policy of benchmark value, without which prices of goods would have skyrocketed to an unbearable limit. With the advantage of this appropriate and sound policy of the government that has helped all and sundry, it is, therefore, very surprising to hear that AGI is lobbying the government with malicious lies, self-centeredness, egoism, elitism and an outright show of arrogance seeking the help of the government to suppress other key players in the private sector.
We should be very much surprised if the government succumbs to this treacherous and diabolic request of the AGI who are trying to lobby against this most acceptable flagship policy of the government to destroy the distribution sector of the economy.
Ladies and Gentlemen, the irony, hypocrisy and absurdity here is that, whiles the AGI is calling for the abolishment of the 50% reduction of the benchmark value policy for the trading community, they are on the other hand crying to and pleading with the government to maintain the same 50% benchmark value reduction for their imports. Members of the Press, you can clearly see the double standards here.
In effect what the AGI is telling the government is that their goods are very expensive as compared to that of their competitors in the other parts of the world, and that the government should surcharge the people of Ghana with high import duties to bridge their extortionist prices which have come about as a result of their own inefficiencies and total lack of understanding of modern technology in manufacturing.
We hereby want the whole world to know that we support local manufacturing companies, and we distribute their products. The plain truth here is that there are some of the local manufacturing companies that are doing well and are highly competitive in terms of quality and pricing; to the extent that Ghanaian importers do not even venture to import their kind of products into the country. This is what we need as a people and a country which GUTA is talking about and expect all local manufacturers to research, know and understand where they have comparative advantage in order to be able to attract patronage from local and international buyers.
May we seize this opportunity to commend the local pharmaceutical industries and others for their ingenuity, hard work and insight. It is very unfortunate that AGI does not know, understand and appreciate the real factors militating against their inability to compete with their counterparts elsewhere on the globe. If they really know this, then, they have failed to tell the government the truth that the high cost of their products is not the importers who purchase their goods abroad or elsewhere, pay freight, cost and insurance, duties and other overhead costs to come and show up the difference in demand of the consuming public in Ghana.
We strongly believe that they know very well that the high cost of utility, high-interest rate on borrowing, high taxes, coupled with their own inefficiencies are the bane of their stagnation as an industry. Whiles the rest of the world is using modern state of the art technology to enhance production, AGI still fails to seek the necessary resources to enhance their production but stick to the obsolete method of production, which is adversely affecting them and making them very uncompetitive in global business.
Members of the Press, it is important to note that AGI do not benchmark their price inequalities with the Free On Board (FOB) price of their counterparts abroad, where they woefully fall short of about 60% in terms of price and advantage and find the appropriate mechanisms of addressing those challenges.
All business people the world over do not merely buy goods because they are just made in their home countries but consider pricing, quality and good packaging at that. As patriotic citizens of Ghana, we will always consider buying locally manufactured goods if the price differentials are negligible and not at abnormal and extortive price.
Ladies and Gentlemen, with regard to food imports like rice, oil, chicken and others, until Ghana reaches food sufficiency, we should manage imports side by side with local production in order not to punish the poor, the vulnerable and the low-income earner, especially in the midst of the COVID-19 pandemic when people need food to energize them against the disease. It is important therefore to remind the government of the immense support and concessions that have been given to the local industries which has given the local manufacturers a leverage of over 40% against the trading sector.
It is, indeed, very surprising that the local industries cannot appropriately utilize the advantage for themselves, as well as to the benefit of the consuming public. It is an undeniable fact that no economy can thrive without a vibrant trading sector, therefore any attempt to suppress this important sector of the economy will not only be inimical but will also be suicidal for the state and people of Ghana. It will be very pathetic, insensitive and discriminatory for the government to heed to the incongruous demands of these callous elements in the private sector, to cause the reversal of the 50% reduction of the benchmark value to suit their whims, especially in this era when businesses are in serious distress.
We wish to state herein that, it has come to our notice that the Ghana Revenue Authority (GRA) has issued statement informing the public that the 50% benchmark value reduction policy has been reversed; effective today, Monday 15th November 2021. We hereby tell members of the trading community that we are not in the known of who authorized the directive, as we have been told by the Economic Management Team (EMT) that there will be a thorough stakeholder consultation before any decision is taken on that policy. This was also reiterated by the Senior Minister, Hon. Yaw Osafo-Maafo in the last Presidential Business Dialogue held at the Kempinski Hotel, Accra. We of the trading community DO NOT ACCEPT and WILL NOT ACCEPT this directive and therefore ask members of the trading community to ignore this statement of GRA outright.
However, GUTA’s door is still open to the government’s quest for stakeholder engagement on the matter.
Besides that, we want to make it clear that businesses are under serious distress due to the global effect of the COVID-19 pandemic, which has caused world commodity and freight charges to shoot up to very abnormal levels.
It is also important to note that in the mid-year budget statement presented to the Parliament this year, 2021, the government also introduced some new taxes.
Fees and charges at the port have also been increased whiles shipping lines are also doing their own thing by charging unreasonable fees, some of which are not even legitimate and need to be addressed immediately; not to even mention the deleterious effect of the exchange rate.
The combination of all these factors make cost of doing business in the country extremely unbearable and rapidly collapsing businesses, as well as exacerbating the plight of the Ghanaian consumer. We know fully well that the government is very sensitive to the plights of the Ghanaian trader and the Ghanaian consumer as well. Overburdening them with another layer of cost will be an indictment on the government, so we will appeal to the government to, as a matter of urgency call for the immediate withdrawal of the statement issued by the GRA on the review of the 50% and 30% reduction of the benchmark value policy and not even consider bringing it into the forthcoming budget statement, to forestall the mounting agitations in the trading sector as the business atmosphere is now full of tension.
Meanwhile, we will appeal to members of the trading community, especially importers, to calm down, and not to pay any additional amount on duty for clearance, as we await response of the government on this serious matter of concern. Distinguished Ladies and Gentlemen, it is our hope and belief that the government will listen to our genuine grievances with good ears and act decisively to avoid any unpleasant situation. Thank you for your attention.