The economy loses an estimated GH¢3billion yearly to the 50 percent import discount on general goods and 30 percent on vehicles policy, Commissioner of Customs Division Ghana Revenue Authority, Colonel Kwadwo Damoah, has said.
The policy, which provides discounted duty on imports was introduced in April 2019, was reviewed downwards to 30 percent and 10 percent for general goods and vehicles respectively in March this year.
“In 2019 it had already gone past the first quarter, it was from April. So, the amount involved there was not as much as the full year of 2020 and 2021. We have estimated it to be GH¢3billion yearly,” said Colonel Kwadwo Damoah.
Colonel Damoah revealed this in Accra during a sensitisation workshop organised in collaboration with the Association of Ghana Industries (AGI), to discuss and educate AGI’s members on some of GRA’s policies and recent initiatives that impact on business, including the discount values on goods and services, GRA taxpayers’ portal, the 4 percent flat rate and E-levy.
(adsbygoogle = window.adsbygoogle || []).push({});The import discount policy, since its introduction, has received mixed reactions from stakeholders in the import business and local manufacturers.
Before the recent reduction, which falls under the first phase of the policy’s two-phase review approach, importers had argued for a retention of the policy at the 50 percent rate in order to keep prices of imported products stable.
The AGI on the other hand demanded its total removal, particularly on goods that the country has capacity to produce – arguing that by offering discounted duty on imported products which can be produced locally, they are being made cheaper than those made here.
However, after several back and forth interactions between government, importers and manufacturers, a point of compromise was reached in the last quarter of 2021, with government reviewing the rates down to 30 percent from 50 percent for general goods and to 10 percent from 30 percent for vehicles, beginning March this year.
“It was a win-win situation for everyone; but, of course, this is phase-one,” the Customs Commissioner said when asked about how the revised rates were arrived at.
Colonel Damoah further revealed that the policy will again be up for review from next year, saying: “The phase-two will take off from next year, but we will have to do more engagements during the last quarter of this year to be able to come up with the exact nature of the review; whether the remaining percentages or discounts are going to be taken off completely; or just as was done in the first phase, reduced by a certain percentage.
“That, I’m not in position to tell now; but it will be based on a directive from the ministry [Ministry of Finance], engagement with stakeholders and the best way out for our country.”
Impact of reduction
He said government is expected to gain an estimated GH¢2.5billion from reducing the discounts from 50 percent to 30 percent for general goods and 30 percent to 10 for vehicles.
This will however be dependent on volumes of imports that come into the country and the impact from the Russia-Ukraine conflict, he added.
“If we had implemented the cut from beginning of the year, we would expect to gain about GH¢3billion; but because we started from March we lost out on that, so maybe about GH¢2.5 billion; that is our expectation. That is if volumes of imports remain the same,” he said.
Source: thebftonline.com