Accra, Ghana, April 4, 2019//-Analyst A.W. Sulleyman has warned Ghanaians especially importers not be excited yet about Dr Mahamudu Bawumia’s populist tax reduction reforms.
He casts doubt on the 50 percent imports duty and 30 percent vehicle reduction effective date which is today.
“Tax levels can be tempered with, only by an Act of Parliament. So I’m not sure of its practicality today. The matter will first have to be considered by the Subsidiary Legislation Committee of Parliament”.
When passed and appreciated by the house, the Ghana Revenue Authority (GRA) will then develop legislation and Gazette same to operationalize it. This takes days, Mr Sulleyman who is also a public policy expert told African Eye Report.
He continued: “If the due process is not followed, we will be dealing with an illegality. Also, there are some common trade agreements that we may have signed up for at the subregional level that may not permit us taking these unilateral tax policies”.
The Common External Tariff (CET) is one of the instruments of harmonising ECOWAS Member States and strengthening its Common Market. Article 3 of the ECOWAS Revised Treaty defines the aims of the community as promoting “co-operation and integration, leading to the establishment of an economic union in West Africa ….”
In order to achieve this, the community is to ensure, in stages, among other means, the establishment of a common market through “the adoption of a common external tariff and a common trade policy vis-à-vis third countries…”
To this end, the ECOWAS Authority of Heads of State and Government established an ECOWAS Customs’ Union. A common external tariff with a common nomenclature so that customs procedures are transparent, readily followed and delays at borders decreased, is a key stone in achieving this union.
Following this, the Authority of Heads of State and Government of ECOWAS adopted in January 2006 in Niamey a decision establishing the ECOWAS-CET which draws on the basic UEMOA CET composed of four tariff bands, or rates.
What are Benchmark Values?
Mr Sulleyman who doubles as development economist explained: “Benchmark values are custom values that are applicable to General Goods/Cargo Imports for the purpose of unified taxation. This is done to remove the exercise of bureaucratic discretion which invariably feeds into corruption”.
For instance: Without Benchmark Values, custom officers will have to use the declared values/invoices/CIF values provided by the importer for assessment.
So, if the importer tells you that he bought his 65′ OLED TV from UK for just £20, that will be it, he further explained.
“Better still, it creates the opportunity for a pure leather double monk shoe from “country A”* to be taxed differently than same quality shoe from *”country B” depending on the whims of the custom officials”.
That’s how far Benchmark Values will go (they apply to only general goods. They don’t apply to vehicles, according to him. The only circumstance under which Benchmark Values will apply to a vehicle is, if it is a new brand/model of car, not previously known.
Currently, almost all vehicles in this world have identified values (blue book) or the Manufacturer’s Suggested Retail Price (MSRP). Customs already have a comprehensive set of these values.
“If you import into Ghana, a car that is not previously known (unprecedented) and can’t be found in the list of values available to customs, a benchmark value will have to be developed for it to enable tax officers tax you appropriately”.
This is done by benchmarking your car with another car of similar or exact features. For instance, if it looks like a Ford Mustang in terms of its trim features and aesthetics, the mustang value (which already exists in the custom list of values) will be used as the benchmark value for taxing your “strange car”.
This is the only time a benchmark value will be applied to a vehicle. Going forward, that car is no longer a strange car. There’s however, a technical computational method for this value.
It is at this point that your 30% relief will apply. Be mindful of the fact that, most of the cars either on our streets or likely to be imported into Ghana already have predetermined values and do not require benchmark values. Your import duty will be computed on the predetermined value cost, insurance and freight (CIF values).
How did we get here?
Mr Sulleyman noted that the current high import duties/benchmark values at the country’s ports have been occasioned by this same government.
Members of the Ghana Union of Traders Association (GUTA) complained about the high import duties that their good imported goods were being subjected which compelled the Akufo-Addo-Bawumia led government to announce the reduction.
According to GUTA, imported shoes that were taxed in dozens for 0.2 cent during the Mahama regime, is now being counted in pairs and valued at the same 0.2 cent.
A container of shoes that was valued at 20 -25 thousand, today same container values 40-45 thousand. That is 100% tax burden imposed on importers by this government.
“So, if you’re reducing it to lessen the burden on them, you’re merely trying to resolve a problem that you created. You’re still not even coming anywhere near the relief levels enjoyed by same importers under the National Democratic Congress (NDC)”, Mr Sulley stated.
Ghana Beyond Aid is just a mirage
With this imports duty reduction, it is now clear that the “Ghana Beyond Aid” agenda is just a mirage.
Mr Sulleyman lamented: “We say we want to build a Ghana beyond aid by growing local production. Yet, we’re busily giving out blanket tax reliefs to imported products, which are already cheap anyway, to come and compete with their local counterparts.
Knock them out of business, create unemployment, fuel importation into the country and pressurize the already weak Cedi against the Dollar”.
He said the government has selected a very poor, incoherent policy option which is not good for the socio-economic development of the country.
African Eye Report
