Several businesses in Kumasi, the Ashanti Regional capital, which deal in fast-moving consumables such as rice, sugar, flour, beverages and key soap, among others, are on the brink of collapse.
Players in the industry have attributed the imminent collapse of their businesses to the implementation of the 3 percent flat VAT by the New Patriotic Party (NPP) government.
The members of the Ashanti Business Owners Association (ABOA), who are the worst affected, have consequently appealed to the government to charge the 3 percent flat VAT rate at the manufacturing level and entry points into the country in order to save their businesses.
Mark Osei Boakye, Secretary of ABOA, said the prices of goods continue to increase due to the implementation of the 3 percent VAT, which eventually reduces their market share.
“ABOA members, who have all registered to charge VAT, are at a disadvantage now, as other business owners, who are not registered with VAT, have the luxury of reducing their prices at will to enjoy bumper sales,” he explained.
“Because we are required to pay 3 percent flat VAT to government on any item sold, we don’t have the luxury to reduce the prices of our goods as those traders who are not registered with VAT always do.
“Businesses that are registered with VAT are experiencing a drop in sales because when the rate is charged on products, it shoots up the price, whereas unregistered businesses sell the same products at reduced prices.
“In a nutshell, the flat rate 3 percent VAT doesn’t allow a level playing field, as it has also led consumers patronizing cheap goods sold by traders who are not registered with VAT, thereby killing our businesses.
Mr Osei Boakye, who was furious, in an interview, said, “At every stage, you are supposed to add 3 percent VAT which increases prices of products.”
He pointed out that some foreigners, who are financially sound, had also taken advantage of the current situation to establish depots across the country where they hoard their goods.
According to him, usually business owners are compelled to reduce prices of their products that are about to expire, but due to the 3 percent flat VAT, ABOA members cannot reduce theirs.
“The new VAT prevents traders from trading among themselves, which is normal in business, if the 3 percent VAT is not charged at manufacturing or entry points, we shall lose our businesses,” Mr Osei Boakye said.
He stated that charging the 3 percent flat VAT from manufacturers and at the entry points would boost revenue mobilization.
“If our suggestion is adhered to, it will create a level playing field in the market, since those who are not VAT registered can no longer reduce prices of their goods and enjoy bumper sales,” Mr Osei Boakye noted.
The ABOA secretary also stated that when the VAT is charged from the source, every business owner will automatically pay the VAT and the government would receive more revenue to develop the country.
“There should be a policy whereby any business owner that will purchase goods from manufacturers would automatically pay VAT so that business owners that are not registered with VAT would not have advantage over us, the VAT registered members,” appealed.
Mr Boakye said that ABOA members are patriotic citizens, who are prepared to pay the 3 percent VAT.
“But the government should charge VAT from source so every businessman will pay to ensure fairness in the market,” he charged.
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