VAT brings down prices in Bolgatanga ?

Bolgatanga, (Upper East) 6 Jan '99,

Bolgatanga, (Upper East) 6 Jan '99, The market environment in Bolgatanga, the Upper East Region, capital remains stable nearly a week after the introduction of the Value Added Tax (VAT) system. Contrary to speculations about increases in prices, there has so far been no indication of any such instance in local business circles, rather a survey by GRi in Bolgatanga indicates that prices of some commodities have fallen. A bar of Key soap (toilet soap), which previously sold at 2,800 cedis, now costs 2,700 cedis. A large-size packet of Omo washing powder now sells at 2,350 cedis, as against 2,500 cedis in the pre-VAT era. In the same vein, a double-bed room at the Black Star Hotel, which previously went for 57,500 cedis a night, is now 55,000 cedis a night. The survey, which covered restaurants, hotels, retail shops and foodstuff sellers in the Bolgatanga central market, showed that prices of rice, maize, groundnuts and other cereals have remained unchanged since the introduction of VAT. However, the prices of drinks, have gone up by 10 per cent in hotels and restaurants. A bottle of beer at Black Star Hotel and restaurant which sold at 2,300 cedis before VAT, for example, now costs 2,500 cedis. Coca Cola and Fanta have both gone up from 900 cedis to 990 cedis a bottle. At the regional offices of Ghana Telecom, there was confusion about the prices of phone cards, as some customers did not understand why a card which previously cost 6,000 cedis should now sell at 6,600 cedis. There was a mistaken belief that a 15 per cent sales tax was included in the previous price of 6,000 cedis and, therefore, a general expectation of a reduction in the unit price with the introduction of VAT which is 10 per cent. However, Mr M.J. Awudu, regional director of Ghana Telecom, explained that the previous prices of phone cards did not include any form of tax, and that they now attract a mandatory 10 per cent VAT charge. The survey also revealed general dissatisfaction among owners of VAT-registered businesses in the town, that want VAT invoices free of charge rather than pay 5,000 cedis for them. Some members of the public interviewed also said it was too early for them to make any objective comments as to the impact of the new tax system on the economy, the general indication is that there has been an appreciably high level of awareness among residents of the Bolgatanga area on VAT. Mr Baba Seidu Issifu, operations manager of the local branch of Lever Brothers, said his company has embarked on the education of its retailers on the implementation of VAT-approved prices for Lever Brothers products. The regional VAT project officer, Mr Haruna Sachibu, said 64 out of 78 businesses in the region which applied for registration have received VAT certificates. He said his office has been in constant touch with all VAT-registered companies since December 30 to ensure effective monitoring and continuous education on the difficult aspects of the implementation process. GRi