Manufacturers to spend US$2 to US$5m yearly on Tax Stamp

Ken Ofori Atta, Finance Minister

consumers to bear the cost

Depending on the size of their operations, manufacturers will spend between US$2 million and US$5 million a year on the Tax stamp, regardless of how much the company pays in excise, should implementation begin on March 1.

This cost will be passed on to consumers, managers of a medium scale producing water company, which produces not less than 2,000 bottles per day have told Goldstreet Business.

After independent checks by Goldstreet Business, it was revealed that the cost of the machine for embossing the stamp is, at least US$500, 000 and manufacturers would have to buy one machine per line of production.

The cost of the sticker is US$48 dollars per hundred pieces so a company which produces up to 2000 bottles a day, would spend US$96,000 on stickers per day.

The tax stamp, which government believes will ensure tax compliance in the beverages industry, would have a sticker embossed on every bottle at the production stage before the products gets onto the market.

Products such as bottled water, alcoholic and non-alcoholic beverages whether canned or bottled and cigarettes will have to affix the stickers on their products.

One of the managers of the water company told Goldstreet Business on condition of anonymity, that government should use other means to monitor tax collection.

“If you want to monitor how taxes are paid it is not us, the companies that are supposed to bear the cost. Now we have to purchase these machines because we can’t stamp the bottles by hand. Aside of that, they want us to also pay for the paper as well. It was when we complained that they then said they will bear the cost of the stickers for six months and after that we pay half the cost, and this will all be passed onto the consumer so our products will be expensive,” she lamented.

The manufacturers prefer a digitized system where the stamp is coded into their old machines as it is done in other African countries such as Kenya.

“Industry is saying that there is another way of doing this our machines already have a coding system. But government says no because it has already entered into an agreement with a company that is a sole supplier of the machines and the stamp. So they are forcing the thing down our throats but we cannot incur that cost,” she alleged.

The implementation has received stiff opposition from manufacturers including the Association of Ghana Industries (AGI) and the Food and Beverages Association of Ghana, (FABG) who explain that it will take a toll on their already high cost operations.

Government’s position

According to the Ghana Revenue Authority(GRA) considerable revenue has been lost through illicit trade. It says illegal operators within Ghana smuggle tobacco, spirits and other alcoholic beverages into the country as well as indulge in the sale of counterfeit products. Goods in transit, particularly cigarettes that are diverted or smuggled back into the country and sold on the market, are difficult to detect.

The GRA claims, these illegal activities cause significant revenue loss to government and also put legitimate brand owners and businesses at a competitive disadvantage.

Furthermore, it says, the counterfeited products are extremely dangerous to consumers as these goods are typically of much lower quality and may contain poisonous constituents which adversely affect the health of consumers.

These developments have necessitated various measures for improving current inspection, verification and monitoring procedures towards increasing revenue as well as addressing the other issues raised.

The Excise Tax Stamp Act 2003 (Act 873) was passed by the parliament in December 2013, ostensibly to enable the Ghana Revenue Authority (GRA) to enforce the affixing of Excise Tax Stamp on specified excisable goods before they are delivered and cleared from the ports for sale.

The tax stamp received presidential assent in January 2014.

By Nana Oye Ankrah