Abossey Okai Spare Parts Dealers Oppose Bawumia's Proposed Flat Tax Regime: The Debate on Import Duties in Ghana.
The proposed flat tax regime by Dr. Mahamudu Bawumia, the flagbearer of the governing New Patriotic Party (NPP), has drawn strong criticism from the Abossey Okai Spare Parts Dealers Association. Despite the promise of a simplified tax system that could benefit many individuals and businesses, the association believes this approach would harm importers and other small businesses.
Dr. Bawumia, who is the current Vice President of Ghana, announced his plan for a straightforward, citizen and business-friendly flat tax regime during a speech at the University of Professional Studies in Accra (UPSA) on February 7. He stated that his government would provide a tax amnesty for a specified period and introduce a flat tax on income for individuals and small-to-medium enterprises (SMEs). The intent behind this flat tax is to simplify the process of filing tax returns and reduce the complexity of the current corporate tax and VAT systems.
However, the Abossey Okai Spare Parts Dealers Association is not on board with this plan. Takyi Addo, the association's Head of Communications, spoke with Morning Show Host Daakyehene Ofosu Agyemang on New York-based Adinkra Radio, explaining why the proposed flat tax would not work for importers. Addo highlighted that importers face high duties on their goods, often influenced by fluctuating exchange rates and other bureaucratic challenges. He argued that a fixed rate would provide stability and predictability, ensuring that importers can clear their goods without additional complications.
Addo pointed out that the association had already discussed these concerns with Dr. Bawumia during a meeting at the Jubilee House. They had suggested a fixed duty rate to avoid the uncertainties associated with customs officers and exchange rate fluctuations. But Dr. Bawumia's proposed flat rate, which is based on a percentage, doesn't address these issues.
Furthermore, Addo mentioned that the National Democratic Congress (NDC) flagbearer, John Dramani Mahama, has promised to implement a fixed-rate system if elected President. This approach, according to Addo, would help solve one of the major problems faced by importers: demurrage. Currently, Ghanaian importers lose around $85 million each year due to shipping line delays and other logistical issues, often exacerbated by government negligence.
Similarly, Alan Kyerematen, a trade expert and another NPP Presidential candidate, has promised to adopt a fixed-rate system if he assumes office. This fixed-rate regime, Addo explained, would be a boon for importers, reducing the complications and costs associated with customs and providing a more predictable business environment.
As the debate over tax policy continues, it's clear that the stakes are high for Ghana's importers and small businesses. Whether a flat tax or a fixed-rate regime is implemented will have a significant impact on the country's economy and its business community. The Abossey Okai Spare Parts Dealers Association has made its position clear: a fixed rate is the way to go for a stable and prosperous import business in Ghana.