Editorial: Ad-valorem tax & Matters Arising

At the beginning of this year, the government introduced a bill in parliament for a 20% ad-valorem tax to be imposed on beverages and bottled water. According to the originators of the bill, the idea behind the tax was to solve the plastic waste problems in the country, especially sachet water bags in the country. After the bill had been passed into law, there was a heated debate as to whether the 20% tax would be imposed on sachet water as well. As the debate was going on, Parliament came out to state that the new tax did not cover sachet water, but the originators of the bill thought otherwise. Four days to the official imposition of the tax, sachet water producers have already increased the price of sachet water by the new tax margin, raising the retail price from Gp5 to Gp10. This development has apparently compelled the government to come out with a pronouncement that the new tax, which took effect yesterday, did not include sachet water, which is well patronised by the poor in society. The sachet water producers also responded by coming out with an official statement, urging their members to revert to the old retail price. The Chronicle believes that this development could have been avoided if the government had taken time to educate the people about the new tax, and those who are supposed to charge it. Unfortunately, this did not happen, allowing the sachet water producers to start imposing the tax, even before the official date for its introduction. The Chronicle would not support any imposition of tax on sachet water, since it would create more hardships for the ordinary Ghanaian. We are, therefore, calling on the government to intensify the campaign, on the fact that no tax has been imposed on sachet water. Should the government fail to do this, some unscrupulous members of the sachet water producers will continue to impose the tax on their products, and pocket the profits. We are saying this, because despite the repeated news item carried by Joy FM yesterday, some of the water sellers were still selling at the new price that has been outlawed. Already, millions of cedis that should have accrued to the state from the Value Added Tax (VAT) are going to private pockets, because there has not been enough education on the collection of VAT receipts at restaurants, and on other items that have the VAT component on it. This must not happen to the sachet water business, and the government must do all it can to ensure that sachet water producers revert to the old retail price. It is our hope that the water sachet producers themselves will put their men on the ground to ensure that all members comply with their own order to charge the old retail price.