AGH¢ 150 million life-line extended by President Kufuor to mitigate the effect of he world food crisis on Ghana is not yielding the desired dividend.
The GH¢150 million is the revenue the government is to lose due to the removal of duties on Some imported items, which was announced by the President last May to ease the effect of the crisis on the Ghanaian consumer.
Items covered by the waiver are fertilisers and agricultural inputs. Some petroleum products also saw marginal reduction in prices.
But the reality is that the measure is not benefiting consumers as the prices of food keep soaring on the local market, a situation the Finance and Economic Planning Minister, Mr Kwadwo Baah-Wiredu, attributed to the greed of some business entities which were cashing in to accumulate huge profits at the expense of consumers.
The move was announced by President J. A. Kufuor on May 23, 2008 and was followed with the subsequent amendment of the Customs Excise and Preventive Service (CEPS) Duty and other Taxes Act to remove import duties on rice, wheat, yellow maize and crude vegetables for soap and food manufacture to become law.
Thereafter, Finatrade Group of Companies, a major importer of food items in the country, announced a reduction in the prices of all its rice brands with immediate effect.
A statement from the company indicated that a 50-kilogramme bag of Vietnamese rice, which was selling at a wholesale price of GH¢53, would go for GH¢49, while Thai rice of the same weight would go for GH¢ 50, instead of the previous price of GH¢55.20.
Texas rice, the highest quality rice, was to sell at GH¢57, instead of GH¢61 per 50-kilogramme bag at the wholesale.
But a visit by the Daily Graphic to shops around CMB and Okaishie in Accra painted a contrary picture as a 50-kilogramme bag of Vietnamese rice sold between GH¢52 and GH¢60- while Thai rice of the same weight sold between GH¢54 and GH¢62.
A litre of Obaapa and Gino cooking oil, which used to sell at GH¢2.20 some few weeks ago, is currently being sold between GH¢2.80 and GH¢3.00, a five-kilogramme bag of perfumed rice (Sultana) that sold at GH¢7.00 in June is currently selling between GH¢7.50 and GH¢8.50 and a small size of Salsa or Gino tomato paste, which was at 15Gp in May, is curently being sold between 22Gp and 25Gp per tin.
Announcing the reliefs, the President took the opportunity to urge all Ghanaians, particularly importers, to co-operate so that the benefits could be felt by all.
Following that, Parliament amended the Customs and Excise Duty and other Taxes Act 2008 to remove import duties on rice, wheat, yellow maize and crude vegetables and was assented to by President Kufuor a day after.
A statement signed by Mr Andrew Awuni; the Press Secretary to the President and Presidential Spokesman, and issued in Accra, said, “With this law now operational, it is expected that importers•, will benefit from the removal of duties and other taxes and subsequently pass on such benefits to the end consumers.”
“Importers are reminded that it should be criminal for anybody to re-export these duty-free items,” it added.
The statement said the removal of the taxes was aimed at reducing the prices of those commodities on the market for the benefit of consumers, in the face of rising food and fuel prices globally.
Later, a report in the Daily Graphic quoted the Managing Director of Finatrade, Mr Nabil Mourkazel, as saying that it was criminal for the company’s clients to continue to sell at the old prices to consumers, saying “we expect the change to reflect on the market”.
In a reaction, Mr Baah- Wiredu, who confirmed the loss of revenue, said it was unfortunate that some individuals were taking advantage of the government’s good intentions to benefit unduly, while the state lost so much.
All things being equal, prices of those items which are now tax free should have gone down but the information we are getting indicates that after some few days, the prices began to move up again.
“The unfortunate thing is that whiles the government continues to lose revenue because of those exemptions, some individuals are gaining,” he stressed.
The Finance Minister said another area of major concern was the attitude of some importers, who, after paying low taxes because of low levels of the cost of items they declared at the ports, rather sold the items at exorbitant prices and thus accrued high profit margins.
A case in point, according to the minister, was the selling price of a one-litre bottle of a foreign alcoholic drink, Courvoirsier VSOP, which stood between GH¢65 and GH¢67 but had a Cost, Insurance and Freight ( CIF) value of GH¢1.92 and duty cost of GH¢1.24 paid to government.
He said looking at it, one could realise that although the seller might incur other expenses such as rent, transportation cost, salaries to workers and utility bills to get the item to the consumer, the profit margin of more than GH¢40 on each bottle of the drink was too high.
He lamented that the attitude of those traders was, affecting the national economy negatively and called for a vibrant consumer association as existed elsewhere in the world, to check the trend, adding that the government would have to provide the needed information for the benefit of the consumer.
He explained that because of the high profit those traders accrued from their sales, they readily offered higher prices at the black market for foreign currencies and thus forced the cedi to weaken against those currencies, which causes rise in inflation.
In a related development, some consumers the Daily Graphic spoke to in Accra complained about the increase in prices of items that were manufactured locally by Unilever Ghana Limited and Nestle Ghana Limited, which they said were being increased on weekly basis.
According to them, prices of basic items such as Pepsodent and Close-up tooth paste, cakes of soap such as Geisha; Sunlight, Lux, Lifebouy and a bar of Key Soap, as well as Milo, Ideal Milk and Frytol cooking oil, were gradually pushing away the ordinary consumer from buying them.
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