VAT policy collapsing our business – FMCG Traders

VAT policy collapsing our business – FMCG Traders

Executives and traders of Ashanti Business Community

Traders who deal in Fast Moving Consumer Goods (FMCGS) at Adum, Kumasi, in the Ashanti Region are up in arms against government for its 6 percent VAT policy rate – which they claim is ‘killing’ their businesses.

Sharing their concerns during a press conference, Executive Secretary for the Ashanti Business Community, Charles Kusi Appiah Kubi, said governments’ VAT policy rate on traders is threatening the survival of their businesses; and if nothing is done to lessen its devastating effects, government will be the one to suffer in the long-run.

Furthermore, Mr. Kusi Appiah Kubi, explained that their members will not be able to charge the 6 percent VAT policy rate because the tax structure and its administration does not support the FMCG market’s features; the policy introduces multiple taxations for each item as it travels along the distribution channel. And, also, high competition coupled with high non-VAT compliance makes charging the tax a disincentive to the few VAT-compliant firms.

“We have demonstrated to government that the 4 percent VAT Flat rate does not sync with dynamics in the FMCG sector, and recommended tax policies which will help government optimize its revenue mobilization while promoting self-compliance.

“We were so optimistic that government was going to heed our recommendations in last year’s budget reading, only for us to wake up with another complex VAT regime – the VAT standard rate which has 6 percent as levy for businesses with sales thresholds greater than GH₵500,000 per year.

“If we couldn’t charge a 3 percent or 4 percent flat rate, what would make government think we can charge the 6 percent flat rate on goods sold? This obviously introduced a compounded problem for our market players,” he said.

He indicated that government’s VAT revenue has fallen below its expected target this year, and this has led government to vent its frustration on a few identifiable businesses like traders who deal in FMCGs to make up the revenue lost.

“Government’s attempt to salvage the situation has led it to vent its frustrations on the few identifiable businesses to make up for its revenue fall. We are compelled to pay them from our working capital. This act is depleting our working capital; government’s VAT policy is collapsing our businesses. We are scared, because day in and day out we see our businesses fall apart. The scariest thing is while our businesses are going down, our economy is also going down faster than we can comprehend,” he observed.

The traders, numbering over 100, have since Monday closed down their shops in an attempt to make government know the gravity of their demands – stating that they have no plans of opening their shops unless government intervenes.

“Government should take all its revenue at the point of entry for goods; that is, from the port or from the domestic factories.

“We strongly recommend that government should adopt more sustainable and business-friendly tax policies which would help it optimize revenue mobilization while promoting business growth.

“This would add to the means of widening the tax net. Government would be able to increase its revenue mobilization. The adoption of our proposition would promote healthy and even pricing within the market,” Mr. Kusi Appiah Kubi stressed.

Original Source: B&FT