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14.05.2005 General News

Govt paying lip service to private sector

By Public Agenda
An Accra High Court has slammed the government for failing to fulfill its widely publicized promise to make the private sector the engine of growth. In a ruling on March 11 involving the Customs, Excise and Preventive Services (CEPS) and the Ghana National Association of Poultry Farmers over the withdrawal of the new tariffs on poultry, the presiding Judge, Justice Ivy Ashong-Yakubu explained that the “government had come into power under the slogan: 'the private sector is the engine of growth' or words to that effect, raising the hopes of business men and women who may have relied on such words of exhortation to contract loans at exorbitant rates of interests to revamp their businesses or start new ones.” Justice Ashong-Yakubu said those who borrowed money to revamp their businesses cannot be blamed for taking such bold steps, so long as parliament took a bold initiative to pass Act 641, which legalized the new 40 per cent tariffs on imported poultry. “What is curious is the seven (7) day's notice given for the suspension of the new tariff. However, as Article 174(2) clearly spelt out, such suspension, waiver or variation can only be by a further act of parliament - that is by the prior approval of parliament”, the judge pointed out.
By emphasizing on the illegality of the suspension of the tariff without recourse to parliament, her Lordship agreed with counsel for the poultry farmers, who argued that since the constitution vests the power to impose or repeal taxes in parliament, it is illegal for any government agency to waive or vary taxes as provided under Article 174(2) of the constitution. Thus once an Act of Parliament imposes a tax and the tax is gazetted the agency or authority mandated to collect the tax can only waive or vary the tax if the Act confers such powers on the body.
In the opinion of Counsel for farmers, individual farmers or firms, stood to gain or lose from the imposition or removal of the new tariffs on imported poultry and therefore had a pecuniary interest in the implementation of Act 641. The judge agreed with them, stressing that the poultry farmers were right in asking the court to compel CEPS to charge the new tariff in order to protect their livelihood as a group and to protect the poultry industry against unfair competition from subsidized foreign poultry.
It will be recalled that in February 2003 budget statement, the Minister of Finance and Economic Planning, Yaw Osafo-Maafo proposed to introduce an additional 20 per cent tariff on imported poultry. This led to the enacting of the Customs and Excise Duties Amendment Act (641), which modified the Customs and Excise Duty Act 512 and legitimized the increase from 20 to 40 per cent on imported poultry.
In furtherance of that policy Act 641 was gazetted on April 17, 2003 and became law on that very day, compelling the Commissioner for CEPS to implement the new tariffs immediately.
But strangely, CEPS on May 12, 2003 by a letter to all ports and stations across the country suspended the implementation of the new import duty as contained in Act 641 and reverted to Act 512 under which the old tariffs were being charged. On August 8, 2003 CEPS issued another order referred to as the: “Tariff Interpretation Order No.2/2003, Changes arising from the 2003 Budget indicating that the new duties were not applicable.
Sensing danger, the Ghana National Association of Poultry Farmers went to court to seek an order for CEPS to implement the new tariffs. Counsel for the association told the court that the purpose of Act 641 was to provide support for local poultry industry ravaged by unfair competition from cheap foreign products. “The intension of Act 641 is to give support to the local poultry industry, to enable it increase its production and to withstand the intensive competition the industry is facing from subsidized foreign imports”, counsel quoted the 2003 Budget Statement to buttress his point.
But counsel for CEPS argued that since CEPS as a statutory body takes instructions from the Revenue Agencies (Governing) Board established under Act 558 and the Ministry of Finance and Economic Planning, it cannot implement Act 641 on its own. “It will require executive action before it can be implemented”, said the CEPS counsel.
CEPS counsel also argued that the complaints of poultry farmers are not in the public interest. “They have a hidden agenda. Their real reason for bringing this action is that if the 40 per cent increase is implemented it will make imported poultry products more expensive so that they will enjoy the unhindered advantage of capturing the local poultry market or gain monopoly over the local market to maximize profit. This kind of attitude cannot be in the public interest”, the CEPS counsel submitted.
However, the case took an interesting twist, when the government on March 18, 2005 rushed to parliament to have Act 641 repealed even before her Lordship, Ashong-Yakubu delivered her verdict. In a heated vote in parliament, the ruling New Patriotic Party scrapped through with 98 votes against 92 by the Opposition National Democratic Congress to have the Act repealed.
The ruling however goes into history as a landmark case in which a court instructed the government to implement its own policy. The judge boldly said the Customs Excise and Preventive Services, acting on behalf of government acted unlawfully by failing to seek prior approval of parliament before ordering the suspension of the new tariffs.
Ironically, the government recently hosted the round-up meeting of the New Partnership for Africa's Development's (NEPAD's) Comprehensive Africa Agricultural Development Programme's (CAADP's) implementation roll-out plan in Accra.
The more than 220 delegates, including Heads of States recognized the fact that financing agriculture development is the responsibility of national governments and highlighted the urgent need to ensure that 10 percent of national budget is disbursed to the agriculture sector, as African Heads of State promised in Maputo in 2003. Ghana's President John Agyekum Kufuor who was the Guest speaker stressed the need for developed countries to remove inimical artificial barriers and subsidies to enable African countries to export their agricultural products.
President was stating the case for African farmers barley three years after his government, acting under pressure from the IMF suspended new tariffs on poultry that would have protected Ghanaian poultry farmers against cheap imports. At the background, civil society organizations were sounding the alarm over the effects of current trade negotiations on the Common External Tariff (CET) for ECOWAS and the Economic Partnership Agreement (EPA) with the European Union. The EU, they said, should stop the EPAs with African countries in their current form, because it would further lead to the deterioration of African economies and “lock them into raw material and mineral production and extreme poverty”. The civil society organizations, comprising the Integrated Social Development Centre (ISODEC), Action Aid, Market Access Promotion Centre (MAPRONET), Peasant Farmers Association, OXFAM, Centre for Public Interest Law (CEPIL), Ghana Agricultural Workers Union (GAWU) and the Abibimman Foundation argued that CET and EPA are detrimental to the agricultural sector in West Africa and the Continent as a whole.
They contended that the North should stop its double standards in trade negotiations and allow fair trade instead of free trade so that African countries would also enjoy the gains to be made from trade.


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