The 50 and 30 percent reduction in import duties as announced by the Vice President Dr Mahamadu Bawumia, appears to have been misconstrued by the public.
Chief Executive Officer of the Association of Ghana Industries (AGI), Seth Twum Akwaboah, said the reduction in the benchmark value does not mean a reduction in duties.
He explained that the benchmark value which is used to calculate the value of goods, only comes into play when there is no clarity and uncertainty on the value of goods being declared.
“So if you are declaring a certain value and it is consistent with what the Customs experts [officials] then they leave it there and you pay the appropriate duty so it is not a reduction in duty. It is only when your declaration is not consistent with what Customs have and they say they are going to use a certain benchmark.”
This means that an importer’s value cannot be below this benchmark, he said adding “any value above it is fine but below that they will not accept it, that is what the benchmark value does.”
There was palpable excitement among many Ghanaians when the Vice President announced the 50 percent and 30 percent reduction in benchmark values on imports during his Town Hall meeting in Accra, Wednesday.
“To reduce the incidence of smuggling and enhance revenue, the benchmark or delivery values of imports have been reduced by 50 percent except for vehicles which will be reduced by 30 percent effective 4th April 2019,” Dr Bawumia said.
He added further “This means, for example, if a container was previously assessed for duty at a value of $20,000, it will now be assessed from tomorrow at a value of $10,000. We expect that the higher volumes of at least 50 percent annually and increase custom revenue.”
Dr Bawumia announced the reduction on Wednesday at government’s Town Hall meeting
Some people jubilated at hearing this because they assumed that import prices were going to reduce, but that may not be the case.
Mr Akwaboah said there are very few instances where import duties will actually be slashed by 50 or 30 percent as people assume.
“In some instances, there may not be any reduction at all and in fact most of the goods we import – if it is consistent and they are declaring the right value – it [the import duty] should not be touched at all. So it will not necessarily result in the reduction in duty. It is not the same as 50 percent reduction in duty.
“It is only when there is uncertainty – the Customs are not clear that the values an importer has declared are consistent with what they think the value to be. In most cases, the value will stay the same so we shouldn’t be too excited that there is 50 percent reduction on import duties,” he added.
He further clarified that because of the Economic Community of West African States’ (ECOWAS) Common External Tariff (CET), it will be impossible for Ghana to effect a blanket reduction of import duties.
The CET is aimed at ensuring transparent customs procedures, reducing border delays and facilitating intra-regional trade.
“The CET has thresholds, in fact, it has tariff bands that are applicable, Ghana cannot change its own just like that. So it has to fall within the tariff bands…if you say 50 percent reduction in duties then it means that the tariff band which is for example 20 percent will be 10 percent and ECOWAS will not accept it,” Mr Akwaboah said.
For the AGI, a total reduction in import rates would have catastrophic effects on Ghanaian industries and that cannot be allowed.