Why talk about electric vehicles when people can't afford basic food - Food and Beverage Association

The Food and Beverage Association of Ghana (FABAG) has reacted to the 2024 Budget Statement and Economic Policy presented by the Minister of Finance to Parliament on Wednesday says it is "a non-transformative budget" that will do nothing to alleviate the suffering of the ordinary Ghanaian. 

According to FABAG, why should the government be thinking about introducing electric vehicles and waiving taxes on its importation when the ordinary Ghanaian cannot afford basic food. 

The Executive Chairman of FABAG, John Awuni, speaking to Graphic Online's Dickson Worlanyo Dotse on Thursday (Nov 16, 2023), said the budget statement did not address the concerns of the food and beverage sector. 

He said the association was hoping that the budget would either reduce or remove some “nuisance” taxes including COVID-19 levy, E-Levy and import duties which were intricately linked to the manufacturing of food related goods. 

He said such a move would immediately reflect in the reduction of food to make life easier for many Ghanaians. 

“We were hoping that this budget will address those concerns that would lead to the reduction in prices for the grassroots person so that come January 1, 2024, when you buy a ball of Kenkey, Waakye, Jollof, fried fish, a bottle of malt, among others the price will reduce or at least stay the same,” he said. 

“They are rather talking about electric vehicles. How many people drive that? Even the well-to-do, if you give them electric vehicles, they make not like it for fears that if the cars break down, there are people here capable of fixing them. It’s a new phenomena which will take a long time,” Mr John Awuni stressed. 

Earlier this year, FABAG revealed that Ghanaian consumers were paying exorbitant indirect taxes and levies on many basic goods.

It said that consumers pay up to 100 per cent on the cost of some items due to various taxes imposed by the government.

The association cited many examples price inflation due to taxes, including a tin of evaporated milk costs GH¢8.5 before taxes, but retails at GH¢15.5 after taxes, representing an 82 per cent increase.

It also cited, a bottle of beer costing GH¢5 without taxes, but selling at GH¢11 after taxes were added, indicating a 120 per cent jump.

Also, exponential price hikes were seen on goods like spaghetti (110 per cent), tin tomato (86 per cent), 50kg bag of rice (100-120per cent), and chicken (130 per cent increase for local chicken).

Therefore, in anticipation of the reading of the 2024 budget, the Food and Beverage Association of Ghana called on the government to reduce or abolish the many taxes and levies because they were adversely affecting the growth of the manufacturing industry and making life unbearable for Ghanaians. 

The Chairman of FABAG as lamented that as far as the 2024 budget statement was concerned, come January 1, 2024, prices may even go up because essential inputs such as electricity and water tariffs would still increase quarterly in the presence of the many taxes placed on the goods. 

“The exchange rate is still at GH¢12.00  to the dollar. In the budget, they did not indicate in any way that it will go down. They said it had stabilised and all that so there was no indication for reduction in that regard,” he said 

“If you look at the manufacturing sector, which we strongly represent, it grew negatively by 2.2 per cent in 2023 and in 2024, it might be worse. Come 2024, unemployment levels will still remain the same if not get worse, because the private sector will not be able to expand to absorb the graduates that will come out of tertiary or already hanging around,” Mr Awuni stressed. 

Proposed tax measures 

Yesterday, the Minister of Finance, Ken Ofori-Atta, laid before parliament 2024 Budget Statement and Economic Policy for approval. 

He announced a raft of tax measures, including reductions, to cushion citizens as the economy leaps gradually from recovery to stability. 

The measures included zero-rated:

Value Added Tax (VAT) on locally produced sanitary pads for five years, import duty waivers on raw materials for local manufacture of sanitary pads for five years, tax-free portion of individual income tax rates to be adjusted and engaging the Ghana Medical Association on waivers for importation of vehicles.

The others are to extend zero rate of:

VAT on locally manufactured African prints for two years, review and expand the environmental excise duty to cover plastic packaging; and industrial and vehicle emissions and review the rates. and fees for stamp duties.

The rest are waiver of import duties on semi-knocked down electric vehicles imported by registered Ev assembly companies in the country for eight years, waiver of import duties on import of electric vehicles for public and private transportation for eight years, a waiver of import duties on completely knocked-down EV imported by registered EV assembly companies in Ghana for eight years as well as the introduction of a simplified tax return as a means of promoting voluntary compliance.