Business News of Monday, 12 January 2015
Ghana is expected to get GH¢686 million in tax revenues annually when West African States adopt the new Regional Common External Tariffs(CET) by the end of this month, the Ghana Revenue Authority (GRA) has noted.
The amount will boost the country’s tax revenue by 3 percent.
This came to light at a workshop on implementation of the ECOWAS Common External Tariff (CET) held in Tamale to sensitise stakeholders on the benefit member-countries stand to enjoy when the new regional tariff regime is adopted and implemented.
The Chief Revenue Officer, Custom Division of the GRA, Yakubu Seidu explained that the ECOWAS new tariff line of 35 percent will apply to only 130 consumption goods, mostly food items, which Ghana presently taxes at 20 percent while items in the 35 percent tariff band are referred to as special goods for economic development because the region has a comparative production cost advantage.
He said the import duty rates for cotton, yarn, woven fabric of cotton, mineral water, onions, soap and cooking oil will be raised from 20 percent to 35 percent to increase revenue generation of the traders.
The CET has been designed to help consolidate the regional market and reduce trade deflection resulting from tariffs harmonisation in line with efforts to stimulate investment in the region.
It is also expected to provide incentives to domestic production, since over a 1,000 tariff lines on raw materials that are currently taxed at 10 percent will migrate to the five percent tariff band.
Also, the new regime will remove some exemptions and concessions under chapter 98 of the Harmonised Coding System (HS Code), which will improve Customs revenue by GH?300m.
The ECOWAS CET has five tariff bands for all countries in the sub-region, based on the 2012 HS Code of all member-states.
Ghana currently has 6,057 commodity lines as against 5,899 of ECOWAS CET, which indicates that when the regional tariff is adopted 168 of Ghana’s commodity lines will be eliminated.
This portends a big boost to the local industries, as these items are mainly basic raw materials that are currently taxed at 10 percent.
Mr. Seidu said Ghana’s third tax band that taxes 2, 333 items at 10 percent will be reduced to 1,373 while 2,624 items admitted at 20 percent will also see a marginal decline to 2,165 including commodities under Chapter 15 of the Harmonised System (HS) such as groundnut oil, palm oil, coconut and cotton- seed oil.
“Equally, certain meat preparations found under Heading 1602 have their import duty rates raised from 20 percent to 35 percent to ensure coherence with other meat products,” he added.
The increase in duty rates on some of the fishing equipment from zero percent to 5 percent will be offset by the increase in duty rate on imported fish from 5 percent to 10 percent, which constitutes 1.5 percent to 2 percent of Ghana’s import package. Raw materials for the manufacture of fishing ropes and fishing nets will attract a 5 percent duty rate under the CET regime.
Import duty rates for cotton, yarn, woven fabric of cotton, mineral water, onion, soap, and cooking oil will be raised from 20 to 35 percent.
That of groundnut oil, palm oil, coconut and cotton-seed oil as well as certain meat products will also see the same increase.
He said the CET rate for rice will be 10 percent instead of the current 20 percent, which will affect local rice production — and hence the need for government to introduce other safeguard measures in the form of countervailing taxes to protect the sector.
“With the petroleum products obtained from bituminous minerals including aviation spirit, motor spirit super, motor spirits ordinary, kerosene and kerosene type jet will increase from 0 percent under current tariff to 5 percent,” Mr. Seidu said.
He urged the public to embrace the project to ensure that the country benefits from the CET and boosts job-creation activities.