Withdraw harmful taxes/policies in the 2024 budget statement

The business community especially the Food and Beverages sector is experiencing very turbulent and challenging times in this fiscal year 2023.

Indeed, a lot of businesses in the Food and Beverages Sector are reeling under tremendous pressure in terms of their ability to maintain their working capital, and in addition, honoring the inevitable interest and tax payment obligations.

Sales have plummeted, and in some cases up to about 50% fallouts in business expectations thus, forcing an unprecedented labor layoff and restructuring of the business operational budget forecast. Most companies for the past eight months, on average, have had some layoffs of their labor force, and are likely to be forced to reduce staff strength on daily basis in order to be able to maintain their activities at the break–even point.

The general instability and unpredictability of the exchange rate, and the quarterly upward adjustment of utility tariffs, reversal of the benchmark values system, increased in Port and Harbor charges and levies, fuel price increases, high-interest rates, upward adjustment of the VAT rates, refusal of government to withdraw the Covid -19 levy of 1%, increase in fees and charges of MMDE’s of over 20%, and in some cases by over 60% by regulatory authorities and the general hike in international commodity prices have cumulatively worked against business profitability, affecting growth and development in the years 2022 and 2023 respectively.

It is also very important to note that the increase in excise duty rates on existing excised products and the introduction of same on new products including sweetened beverages and fruit juices as well as the implementation of the Income Tax Amendment Act exacerbated the woes of players in this sector. It will interest you to note that, the beverage sector companies pay almost 70% of their profit to government in taxes, levies and fees.

It is in light of the above that, the Food and Beverages Association of Ghana (FABAG) is appealing to the government ahead of the presentation of the 2024 budget statement to take a critical and concerned look at the tax measures introduced in the year 2023 especially;

• The excise tax on sweetened beverages, fruit juices and alcoholic beverages

• The growth and sustainability law which taxes profit before the mandated corporate tax. We consider this basically as double taxation which erodes our investment capital.

If possible, they should be withdrawn completely as they appear to be a nuisance to our profitability and the performance of players in this sector.

For example, the following are taxes and levies paid on an average product imported into the country therefore, making the cost of manufactured or imported goods very high to the consumer;

• Import Duty - 20%

• Import VAT. - 15%

• Ecowas levy - 0.50%

• Network charge - 0.40%

• Network charge VAT - 15%

• Network charge Covid-19 - 1%

• Network charge NHIL - 2.5%

• Special import levy - 2%

• Ghana shippers authority - 0.9%

• Import NHIL - 2.5%

• Withholding tax on import - 1%

• GHS disinfection fee -

• Ghana export import bank levy - 0.75%

• Ghana education trust(GET) Fund import - 2.5%

• Network charge GET Fund Levy - 2.5%

• Inspection Fee - 1%

• African Union Import levy - 0.2%

• Covid-19 health recovery - 1%

• Fda 0.5% and 0.8% invoice value -

• Ghana Standards Authority Fee -

(Cumulative 65.95 + Fda + Gsa + Disinfection fee $30)

We also have an antecedents cost build up, electricity and quality of water for manufacturing sector which is a complete burden to us. Several appeals to government to consider an appropriate mechanism to alleviate these burdens have fallen on death ears.

Lot of businesses are literally shrinking and some are about to collapse which gives great concern to us within the private sector, as it has long-term impact on employment levels and revenue mobilization for the government.

Indeed, the significant drop in imports as reported by the Bank of Ghana recently supports our concern that, our sector has been badly hit. The decline in imports does not point to the fact that local production has increased but rather the Food and Beverages sector has shrank giving a great cause of worry to us as the private sector cannot perform optimally as the engine of growth of the economy.

Currently, the Ghanaian market is replete with smuggled goods such as rice, sugar, toilet rolls and general fast-moving consumer goods. The regulatory authorities such as the customs, Food and Drugs and the Standards Authorities have literally been overwhelmed with substandard products that are smuggled in through our porous borders.

These are unfortunately innovative ways that unscrupulous businessmen and women have adopted to survive the hard times posed by the harsh and inimical tax policies introduced by the government on legitimate and taxpaying companies. It is time to overhaul our taxation system.

As partners in development, we strongly appeal to the Finance Minister and the Economic Management team to remove totally or remodel the Excise tax policy on sweetened juices as well as the income tax on profit before tax. A very swift and critical action must also be taken to curb the menace of smuggled goods that have taken over the Ghanaian market. Border officials must rise up to their full duties as well the FDA properly resourced to do their mandate.

We believe when these policies are completely withdrawn or remodeled, it will help to promote good business health not only for our sector directly, but business in general.

It will significantly drive down prices in the food sector and for that matter promote good and reliable trade turn. Ultimately, there will be a positive impact on government revenue mobilization, as sales will sharply increase and boost the anticipated confidence in the business environment and an ultimate growth and development in our sector for the year 2024 and beyond.

The purchasing power of consumers and the sales volumes of our businesses have been greatly affected negatively due to the continuous upward adjustment in utility tariffs, fuel, school fees, rent and medical among others, it is in these light that we appeal to you to withdraw apparently, these harsh new tax policies such as the expanded excise tax and the growth and sustainability tax introduced in the fiscal year 2023 as well as deal with the menace of smuggling in the country.

Executive Chairman

John Awuni – 024 4311 041

Samuel Ato Aggrey

Gen. Secretary

024 4385 824