Benchmark import values, straight levy up for review

Efforts are currently underway to address the concerns of industry, as the Ministry of Finance engages industry leaders, among other stakeholders, on the policies to be introduced in the upcoming 2020 national budget.

Key among the issues of concern raised by industry, which are now being discussed with government is the wholesale reduction in benchmark values by 50 percent for imports and the straight levy, which was introduced in the 2018 mid-year budget review.

Speaking at the at the opening of the AGI Ghana Industrial Summit and Exhibition 2019, the President of the Association of Ghana Industries (AGI), Dr. Yaw Adu Gyamfi said AGI will not hesitate to bring government’s attention to policies that are inimical to the growth of industry, such as benchmark value policy and straight levy policy, for which AGI is hoping to be reviewed in the 2020 national budget.

“Why because, it is really killing our businesses,” he stated.

Since the introduction of the wholesale reduction in the benchmark values for imports earlier this year, industry has lamented on the implications of the policy.

The AGI has quizzed the effects of the influx of finished imports attracting 50 percent reduction in benchmark value on local industry.

The Association maintains that, some of these imports into Ghana already enjoy significant export rebates from their countries of origin. With the foregoing, locally manufactured products including those for which Ghana already has local production capacity and comparative advantage are under serious threat from these imports.

For the straight levy, the Association points out that since its introduction in the 2018 midyear budget review, it still remains a disincentive to local manufacturing.

Before the straight levy came into force, manufacturers recover 17.5 percent input 17.5 percent output Standard Rate VAT fully. Under this regime, manufacturers can only claim 12.5 percent, leaving five percent as cost burden, likely to be passed on to consumers. The three percent VAT Flat Rate scheme (VFRS) operators (retailers/traders) have been exempted from this five percent tax burden under this new regime.

In effect, manufacturers become less competitive, which the Association noted  makes it cheaper to import and sell to make profits than to manufacture the same products locally.

The five percent tax burden translates into additional cost in millions of cedis to many local manufacturers.