And Leaves Buyers At Their Mercy Again
The Akufo-Addo government, has abolished import duty and taxes on spare parts, as it promised during the campaign for election 2016, leaving buyers at the mercy of dealers in a market, which is not regulated, leading to what is famously called “Kalabule”.
The Minister of Finance, Ken Ofori Atta, announced the removal of import duty, taxes, among others levies the Akufo-Addo government considers “nuisance taxes” which in the regime’s view, is stifling the growth in the private sector.
They include, the tolls charged head porters locally known as ‘Kayayei’, who move from the north to the south to engage in several menial jobs. Mr. Ofori Atta, made the announcement, while delivering to Parliament the 2017 budget statement and economic policy yesterday, Thursday March 2, 2017.
The spare parts dealers, ahead of the 2016 general elections, astronomically increased the prices of their wares in most trading centres, especially Accra, Tema and Kumasi, thus making the then President, John Dramani Mahama and the National Democratic Congress (NDC) unpopular and unattractive for re-election.
The practice known as “Kalabule” is the organized, premeditated and blatant price hikes by sellers for personal economic gain.
“Kalabule”, became a household name during the Ignatius Kutu Acheampong regime in the 1970s, where it manifested in the hording of essential goods such as soap, cloth, sugar, milk etc, for traders to be make unimaginable profits on their wares at the expense of consumers.
The astronomical price hikes, couple with other things, sparked an avalanche of public anger against the Mahama regime, leading to its defeat. Days after the defeat, the dealers interestingly reduced on of prices of their goods across the country, particularly Accra and Kumasi to the excitement of buyers, with buyers told that the victory of Akufo-Addo, had brought them blessings.
For instance, prices of vehicle spare parts, have been reduced at its hub, Abossey Okai in Accra, because of Akufo-Addo, to the excitement of vehicle owners and mechanics working on faulty cars.
The list of taxes abolished include the 1percent Special Import Levy, Kayayei market tolls, 17.5 percent VAT/NHIL on financial services, 17.5 percent VAT/NHIL on selected imported medicines that are not produced locally, 17.5 percent VAT/NHIL on domestic airline tickets, Duty on imported spare parts, 5 percent VAT/NHIL on Real estate sales, Exercise duty on petroleum
The list of taxes to be reviewed are; Corporate income tax to be progressively reduced from 25 percent to 20 percent in 2018, Replace 17.5 percent of VAT/NHIL with 3 percent flat rate for traders, Tax credits and other incentives for businesses that hire young graduates from tertiary institutions, Tax incentives for young entrepreneurs, Reduce special petroleum tax rate from 17.5 percent to 15 percent
Some spare parts dealers at Abossey Okai in Accra, later denied reports that their decision to reduce prices of products ahead of the Christmas season, was done in solidarity with the newly elected President, Akufo-Addo.
The leadership of the spare part dealers explained that the reductions in prices by some traders, was as a result of a regular Christmas discount it gives to customers.
But an economic analyst, John Gatsi, at the time said it was strange to believe the claims of the leadership of the spare part dealers.
According to Mr. Gatsi, some traders are undertaking the action due to the election of Nana Akufo-Addo as President of Ghana at the just ended elections, saying this was done in the year 2000, when then President Kufuor ,was elected.
He noted that, it may be possible for an opposition party to use the traders as a tool against the incumbent government, by urging them to increase prices of their products and accuse the government for the high costs. He, however, said one could not easily connect the current reduction to the outcome of the elections, since this is happening after the elections.
The Herald’s sources in the Ashanti Regional capital; Kumasi, also told the paper that the Ashanti Regional NPP Chairman, Bernard Antwi Boasiako, popularly known as “Chairman Wontumi” had been on a couple of radio stations, asking traders in the metropolis to reduce the prices of the goods since Akufo-Addo has won the election.
It was, however, not the first time traders had to reduce prices. In 2001, following the victory of John Agyekum Kufuor and the NPP over John Evans Atta-Mills and the NDC, prices were reduced in a similar manner by the traders, signifying an unholy alliance between the NPP and the traders.
But speaking on Citi Eyewitness at the time, Mr. Siaw Ampadu, a leader of the traders at Abossey Okai said, the reduction in prices was not due to political reasons; but is to afford customers the opportunity to buy their products at reduced cost.
“It is true that we have cut our prices down but it is not due to political reasons. Since 2007, we find ways to cut down on our prices so that our customers can purchase our products. Being in the Christmas time, people travel a lot and if the prices are high, they cannot buy from us so we try to cut our prices every December and we started since 2007,” he said.
There are speculations the dealers reduced their prices to support the newly-elected government after it had sabotaged the incumbent NDC by selling at high prices. But according to Mr. Ampadu, “Abossey Okai is not doing politics with this. It is not because of Nana Akufo-Addo we are doing this.”
He insisted that, the move was genuine in spite of economic challenges such as high import duties, high interest rates and high exchange rate that traders go through.
He said, there was no definite percentage of reduction being offered to customers, however, the traders offered discounts that made economic sense.
They include the tolls charged head porters locally known as ‘Kayayei’ who move from the north to the south of Ghana to engage in several menial jobs.
Ken Ofori Atta, made the announcement, while delivering to Parliament the 2017 budget statement and economic policy.
He noted that, although some of the taxes were introduced by the erstwhile National Democratic Congress (NDC) government to raise revenue, they have proven to be unprofitable means of raising money, and had rather become a burden to the private sector, stifling their development.
“A number of tax measures have been introduced in recent years in an attempt to deal with revenue shortfalls. Some have proven to be nuisance taxes. They have no revenue yielding potential, and at the same time impose a significant burden on the private sector and on the average Ghanaian citizen. As part of our commitment to re-energize the private sector, the government has decided, as pledged, to review these taxes to provide relief for business. ”