Mid-Year Budget Review: Remove Excise Tax On Bottled Water—AGI

The Association of Ghana Industries (AGI) is calling for an excise tax on bottled water removed in the mid-year budget review as it would help make companies in the sector more competitive and productive.

The Association said the high excise regime on bottled water, a basic necessity in the country, is a major challenge because Ghana's excise rate of 17.5 percent on bottled water was significantly higher than the ECOWAS recommended a limit of 10 percent for non-alcoholic beverages which exempts water.

A statement signed by Dr. Yaw Adu Gyamfi, the President of AGI, and copied to the Ghana News Agency, said many countries in the sub-region did not levy excise on bottled water, and this makes Ghana an outlier with such a high rate of 17.5 percent.

The statement said: “Examples of countries that do not levy an excise tax on bottled water include Benin, Burkina Faso, Côte d'Ivoire, Mali, Niger, Nigeria, Senegal, Guinea Bissau, and Togo and we, therefore, propose a waiver of this excise tax on bottled water”.

It said while the Association did not expect any new taxes in the forthcoming mid-year budget review, the Association expects a revision of some of the existing tax policies.

The Association commended the government for the passage of the Fiscal Responsibility Act to ensure prudent expenditure by Government and urged the authorities to strictly adhere to the tenets of the Act to maintain macro-economic stability in both the short and long terms.

On benchmark values, the Association said the wholesale reduction of benchmark values for all imports was problematic, noting that a number of key concerns are still being raised by Ghanaian industrialists.

The statement questioned what will become of local manufacturing with the influx of finished imports attracting 50 percent reduction in benchmark value, adding that some of the imported items to the country already enjoy significant export rebates from their countries of origin, thereby discouraging local investment in the affected sectors.

It said the situation is further worsened if importers of finished goods are not registered and captured under the Valued Added Tax (VAT) scheme as is largely the case and end up selling their products in the market without charging front end VAT/NHIL/GETFund.

The Association urged the government to quickly review the luxury vehicle levy imposed on vehicles with high engine capacity of 2950cc and more because the definition for the luxury vehicle was a misnomer that increases the cost of doing business in the country.

It said there are a number of companies, which have fleets of such vehicles, not a luxury, registered in the company name and used mainly for distribution of their products/brands, yet being affected by the policy adding that “classifying such vehicle as luxury is misleading and must be either scrapped or reviewed”.

The Association urged the government to as a matter of urgency help develop local production capacity through incentivizing industry especially with coming into force of the African Continental Free Trade Area (AfCFTA) agreement.

The statement said imported products, which compete with products for which Ghana has a competitive advantage and local production capacity should not be duty-free adding that it would position Ghanaian industries to fully leverage the opportunities of the agreement, otherwise the country could be marginalised.

The Association welcomed the quarterly exchange rate fixing regime introduced by the government even though it appears to be a short-term measure adding that “AGI will like to see measures that will help change the structure of our economy towards export market development to reduce the persistent pressure on the cedi”.

On the cost of electricity, the Association said the high cost of electricity continues to be a major concern for businesses regardless of the 25 percent reduction in tariffs last year as the cost of electricity has remained high for industry whereas peers in neighbouring countries enjoy lower tariffs.

It said: “Reversing the practice where industry subsidizes residential consumers will further drive down the cost of electricity to industry and measures must be taken to reverse this trend.

---citinewsroom