Importers’ margin a factor of high-priced goods – Prof. Lord Mensah
Economist and Senior Lecturer at the University of Ghana (UG), Prof Lord Mensah, has said tariffs imposed on imports by government is not the sole major driver of prices of goods in the country.
According to him, the profit margin of importers’ significantly adds to the high prices of goods imported into the country.
“I can tell you that tariffs aren’t the only factor that influence the price of imported goods.
“If you see the price of an imported item on the shelf, it’s not driven only by price, I remember the days the government used to say that they provide tariff reduction so that price of products on the market can be reduced. But I can tell you that it’s not only tariffs that influence the price of imported goods on the market.
“There are several indicators that move the price and one is the margins importers are looking for. So the question is, are they willing to reduce some of profit margins as a result of this reversal,” he opined.
Prof. Mensah’s assertion follows statements made by the Ghana Union of Traders Association (GUTA) that prices of goods will increase significantly following the reversal of the 50% benchmark values on the imports of some 43 selected items.
“Prices are going to double. The benchmark value was the only last straw businesses were holding on to,” President of GUTA, Dr Joseph Obeng remarked.
Dr Obeng in earlier engagements with the press, stated that the scrapping of the policy will be suicidal, saying the policy brought relief to the trading community, sanity into the system and eased tension and agitations amid the impact of the coronavirus on cross-border trade.
“Any attempt to remove this good policy of the government that brought relief will be suicidal for the state because it will not only collapse business but also cause an unbearable rise in prices of goods and services beyond the reach of consumers, especially low-income earners and the unemployed.
“We should be very surprised if the government succumbs to this treacherous and diabolic request of the AGI who are trying to lobby against this most acceptable flagship policy of the government to destroy the distribution sector of the economy,” he warned.
Benchmark Values: Implementation of policy reversal takes effect
Meanwhile, starting January 4, 2022, the Customs Division of the Ghana Revenue Authority, will begin the implementation of government’s policy directive on the reversal of the reduction of values on the import of 43 selected items.
The reversal is said to affect selected items from all the three categories to which the reversal was applied.
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Government in 2019, introduced the benchmark policy in accordance with the world customs organization’s policy or regular review of valuation data base. Under the policy, certain commodities were benchmarked to the prevailing world prices as a risk management tool to reflect the true market dynamics of these commodities.
It also took into consideration, factors such as protection of health, the environment and security as well as protection of local industries.
According to the GRA, in line with the reversal, series of engagement have been held with relevant stakeholders with the aim of reaching a consensus on the implementation of the policy.
All the 43 items on the list have been affected by the review. Some of the imported goods affected by the reversal of the benchmark values include sugar, Portland cement, vehicles, palm oil, aluminium finished products, among others.
Background
Earlier, in November 2021, the Customs Division of the Ghana Revenue Authority (GRA), announced the repeal of the 50 percent benchmark value on some selected goods imported into the country.
The reversal of the policy introduced by the government in 2019, the Customs Division of the GRA in a letter to the management of the country’s seaports, managers of the Integrated Customs Management System (ICUMS) and the business community at large was to take effect on Monday, November 15, 2021 – but that failed to materialize as the directive will be implemented starting January 4.
The repeal of the policy, the Customs Division of the GRA notes, is in view of an agreement reached on the issue following various fora discussions on the matter coupled with an expected revenue increment.
“It has been agreed that discount on some commodities currently being enjoyed should be reversed to achieve revenue effect.
“To this end, November 15, 2021, is therefore, slated for the effective date for the implementation of the removal of the benchmark values on some selected items,” read parts of the letter earlier put out by the GRA.
Per the information contained in the letter, imported goods affected by the new directive include sugar, Portland cement, vehicles, palm oil, aluminium finished products, among others.
In a separate letter to the Commissioner-General of the GRA, the Customs Division outlines procedures or guidelines for the implementation of the new directive by Customs officers.
Per the letter, the implementation of the repealed 50 percent benchmark value will be facilitated through the Integrated Customs Management System (ICUMS).
Already, provisions have been made in the ICUMS for Customs Officers to be able to directly manage the reversal of the benchmark value on the selected goods.
This caused a banter over the removal or otherwise of the 50% benchmark value on imported goods have between the Association of Ghanaian Industries (AGI) and the Ghana Union Traders Association (GUTA).
