Editorial

Handle benchmark reversal with utmost caution

In 2019, the Government introduced a benchmark policy in accordance with the regular review of valuation database by the World Customs Organisation.

Under the policy, the government reduced charges on 43 items, which charges included high import duties, other taxes and fees.

The benchmark values introduced resulted in 30-percent reduction in charges on vehicles and 50 percent on the rest of the items.

The government’s benchmark reduction policy followed agitations by the business community that the cost of doing business was too high. 

It was, thus, introduced in 2019 to save businesses in the country from total collapse, after they complained that the numerous high charges on imports, ranging from 55 to 65 percent, were draining their capital.

Under the benchmark value policy, certain commodities are benchmarked to the prevailing world prices calculated in dollars and reviewed from time to time as a risk management tool with regard to dynamics on the market.

What that means is that the benchmark values can rise or fall, so everyone may have thought the government could reverse its 2019 action without much opposition when the Customs Division of the Ghana Revenue Authority (GRA), in a statement dated the January 2, 2022, indicated that effective January 4, 2022, the Division would begin the implementation of the reversal of the benchmark values applied to the 43 items.

However, this was not to be as the opposition National Democratic Congress (NDC), the Ghana Union of Traders Association (GUTA), comprising 68 trader associations, and other business groups have raised vehement opposition to the reversal.

Even if the public choose to call NDC’s opposition as propaganda, what about the issues raised by GUTA and the other groups?

The GUTA says the outbreak of COVID-19 in the country has worsened the business situation, claiming its members are now smarting under conditions harsher than those that necessitated the 2019 Government action.

That assertion implies that the business community would rather love it if the benchmark values are further reduced.

Ironically however, the Association of Ghana Industries (AGI) welcomes the reversal policy, saying it will help in creating employment locally, boost the manufacturing sector and make the country competitive on the global market.

The AGI’s support for reversal is pivoted on good points though, but comes in to make the situation delicate to handle, hence the Ghanaian Times supports President Nana Addo Dankwa Akufo-Addo’s directive to the Customs Division to suspend the reversal of the 2019 benchmark values

The directive, according to a source at the Presidency, is to allow for wider consultations with the relevant stakeholders.

This is important because in the current era, where people in general and groups in particular plead various reasons and rights for their actions, the safest way to do things that affect others is to consult and achieve consensus.

Today, even where the law is clear, some elements try to circumvent it to achieve their aim so in order not to create a dicey situation, even the application of the law is done with caution.

This paper, therefore, would plead that all the stakeholders must not just be consulted but also convinced with the strongest of reasons, in which case both the merits and the demerits equally matter.

One thing the government must not lose sight of is that if the reversal is foisted on the business community, the players there would have no alternative but to transfer the burden to consumers and that would mean aggravating the already biting hardship faced by the consumers.

It is true that the government needs revenue but any revenue source that may worsen the plight of businesses and the citizenry must be given a second look.

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