No VAT tags, but cusomers pay VAT prices , ministry finds out

Accra, (Greater Accra) 6 Jan. '99,

Key companies which have registered to collect Value Added Tax (VAT) have not computed their prices to reflect the new tax. Price tags still have pre-VAT prices, but receipts say prices are "VAT inclusive", officials of the VAT Service, Ministry of Trade and Industry and Ministry of Communications found out today. The officials were on an exercise in Accra and Tema to sample the effect of the introduction of VAT on prices. The exercise, which was led by Dr John Abu, Minister of Trade and Industry, took them to White Chapel Supermarket, Lava, Papaye Fast Foods and the Tema port. Other officials were Mr John Mahama, Minister of Communications, Mr Dan Abodakpi and Mr Peter Peperah, deputy ministers of Trade and Industry and Mr Ezekiel Asamoah, Director of the VAT Service. They were joined by officials of the Customs, Excise and Preventive Service and the Ghana Ports and Harbours Authority. Even though, some of the managers claimed they had made downward adjustments, visits to the shops revealed the opposite; they had displayed their VAT certificates but were charging the old prices. The officials also found out that the introduction of VAT was exposing middlemen and smugglers, since they normally did not have documents covering their items and therefore did not pay tax. Dr Abu asked companies not to buy goods from middlemen who, most of the time, sell smuggled goods. "Big shops and companies must stop buying products from these faceless middlemen who are mostly smugglers. By this we will be flushing out these people". Mr Daniel Ofori, managing director of White Chapel Supermarket, said customers are not complaining about the prices, adding that prices went up sometime in October when some manufacturers of locally produced goods increased their prices. He urged the VAT office to continue its education campaigns directed at the computation and calculation of VAT. Mr Manoj Punjab, managing director of Top In Town at Osu, said his shop is not charging VAT because they have not been educated on how to calculate the new tax, even though they have registered for it. In related development Mr Robert Kwami, acting commissioner of CEPS, at the Tema port, has said that vehicles up to 1,900 cubic capacity (cc), which were attracting five per cent import duty, will now attract 10 per cent VAT. Vehicles of 1,900 cc to 2,500 cc will have 10 per cent VAT replacing the 10 per cent import duty, while those above 2,500 cc will pay 10 per cent VAT plus 17.5 per cent special tax. Mr Kwami said excise duty on cigarettes and cigars will be reduced from 170.65 per cent to 155 per cent, while excise duty on stout will be brought down to 55 per cent from 65 per cent. He said mineral water will attract 25 per cent excise duty from 35 per cent, while malt will attract five per cent import duty instead of 10 per cent. He said the VAT calculation and computation procedures have been configured into their computers and does not expect any problems with implementation.

GRi