GRA postpones implementation of revised benchmark values amidst heated public debate
Adnan Adams Mohammed The government through its revenue collecting agency, Ghana Revenue Authority (GRA), has for the second time deferred the implementation of the reversal of reduction of values of imports (known as Benchmark Values) on selected items, to next week. This is to allow government and maritime trade stakeholders, basically importers, to have much understanding of each other on the implementation of the revised benchmark values of some imported items. GRA further explains that, the postponement which it term as ‘transitional arrangements’ will ensure a smooth implementation. It is also to allow a storage free period for vessels that discharged on 31st December 2021 to go through clearance without being affected by the reversal of the policy. A press release issued last week by the Authority noted that, effective Monday, 17th January 2022, any Bill of Entry (BOE) presented without payment of duty and other taxes or deposit of security (where it is a suspense cargo) will be affected by the policy. A bill of entry according to the release shall require reprocessing to be affected by the new policy. This will include the following: “Where BOE tax assessment is accepted by declarant but tax bill has not been paid; Where BOE tax assessment is yet to be accepted by declarant; and for any assessed BOE that was affected by the earlier effective dates of 4th or 6th January 2022, a reprocessing will be required to reverse the effect of the policy on duty and taxes”, the GRA statement indicated. However, the Ghana Union of Traders Associations (GUTA) has called on the government to hold on with the implementation of the reversal of the 50% benchmark value on imports, which was expected to take effect from, Tuesday, 4 January 2022. According to the association, times are hard as a result of the COVID-19 pandemic, especially, as it is still prevalent. “World commodity prices are still high and going up, with freight charges being extremely high”, GUTA noted, adding that “the conditions that resulted [in] the introduction of the benchmark value policy are still prevalent and even worse. The association also said the prices of “essential commodities such as food, pharmaceuticals and others will be extremely unbearable for the consuming public, which will also affect turnover and volume of trade in the country, thereby collapse businesses”. “In the fight against the pandemic, prices of food items, pharmaceutical products etc., need to be affordable to the consuming public”, GUTA said. “Our local manufacturers cannot meet the demand of most of the listed items, therefore, we are not self-sufficient as a country, to surcharge the consuming public”, it said. The group also noted that the “lack of competitiveness of our local industries is based on other factors rather than the benchmark value policy of which they (industries) are also beneficiaries.” It continued: “The exchange rate is also going up at this time” while “the competitiveness of the Ghanaian trader within the sub-regional bloc” and cross-border trade “should also be conceded as very necessary and important.” GUTA referred the government to its earlier promise to engage stakeholders through the Economic Management Team on the issue before any decision is taken, emphasising that the engagement is yet to take place. The association further made reference to the press conference by Finance Minister Ken Ofori-Atta, at which “he acknowledged the fact that the reversal of the benchmark value would have an adverse effect on importers and that the government would find a mitigating factor to cushion the effect but this has not yet been done.” Apparently, the Chief Executive Officer (CEO) of the Association of Ghana Industries (AGI), Seth Twum Akwaboah has admitted they lobbied for the reversal of the benchmark value on imports because it was negatively affecting the growth of local industries. The businessman noted that the introduction of the benchmark values reduced the cost of imports with duties being reduced by half, making imported products cheaper than locally manufactured ones. “With this being the case in our markets, local manufacturers were making losses and that is why we lobbied for the reversal of the benchmark value on imports for local manufacturers to progress.” Sharing insights into the plight of local industries with the introduction of the benchmark value, he indicated that local rice manufacturers recorded heavy losses. “Local rice manufacturers had to lay off staff and the few remaining were not even paid as patronage of their goods dwindled. This happened because the benchmark value made imported rice cheaper than the local ones. Oil, poultry and t-roll producers all made losses this Christmas as cheaper imported ones flooded the market.” According to him, the government’s industrialization agenda itself has suffered from the introduction of the benchmark value “and it is right for us to call for the reversal because such policies do not help the local manufacturing sector.” Seth Twum Akwaboah admitted the AGI needs to be inward-looking to become competitive, he also pointed out that both external and internal factors affect them. “The cost of energy and capital is high in Ghana and not favorable for us but we don’t need to focus on that alone to succeed, but we also need fairness. If the cost of imports for our competitors is low and our cost of production is high, how can we be competitive?” He views the decision of the government to reverse the benchmark value as nothing new, “we are only going back to what was formally practiced.” But, the largest opposition party, National Democratic Congress (NDC),has called out the government for the reversal of 50 percent discount on benchmark values of some imported items. The party describe the situation as ‘insensitive and callous decision’ as it believes that prices of the affected items will double in coming days. NDC is thereby calling on Ghanaians, importers and traders to come together as a people irrespective of their social backgrounds or political affiliations to resist these draconian measures of the failed Akufo-Addo/Bawumia/NPP government which will only worsen living conditions should they be allowed to stand. “This terrible decision comes at a time when the national currency is depreciating and world commodity prices are increasing at an alarming rate, with freight charges and port handling charges being extremely high.”, Sammy Gyamfi (Esq), National Communications Officer of NDC said in a press release. “More importantly, the callous decision by government to reverse benchmark value discounts comes at a time Ghanaian businesses, startups, parents and households are reeling under a yoke of excessive taxation, persistent increases in fuel prices and high cost of living never before witnessed in the anals of our country.” In 2019, in accordance with the World Customs Organisation’s policy of regular review of valuation database, the government introduced the benchmark policy. Certain commodities are benchmarked to the prevailing world prices as a risk management tool, to reflect the true market dynamics of these commodities under this policy. It also takes into consideration factors such as the protection of health, the environment, and security as well as the protection of local industries. The benchmark value is the amount taxable on imports.