Taxes must distinguish between raw materials and finished products

Accra, Nov. 23, GNA - The tax system must distinguish between raw materials, intermediate and finished products in order not to put manufacturers at a disadvantage, Mr Isaac Osei, Member of Parliament (MP) for Suben, said on Tuesday. The New Patriotic Party (NPP) MP, who gave a statement on the floor of Parliament in support of Ghanaian manufacturing industries, said it was therefore important to review the concession regime within the harmonized tariff code.

He explained that in the production of cement there was a situation where a bagging facility which imported finished bulk Portland cement paid the same tariff as the manufacturers who imported clinker and used the local limestone to produce cement.

He said most domestic furniture manufacturers were no longer in business and that pharmaceutical companies faced the same adverse situation due to under-priced products from India and China. "Competition is good but must be fair," he said.

Mr Osei stated that massive importation of foreign products had the effect of transferring jobs from Ghana to other countries. Using Ghana's aluminum industry as an example, he noted that the only rolling mill in the country - Aluworks Limited - was hemorrhaging in the face of unfair trade practices from exporters of Chinese products. Mr Osei said Aluworks had to import its raw material because Valco was not operating and the company had to pay five per cent concessionary tariff while finished aluminum products attracted a tariff of 20 per cent. Manufacturers of corrugated roofing sheets also paid five per cent tariff.

He argued that after payment of duties and charges as well as their conversion costs, Aluworks should sell their finished coil at 3,650 dollars and not at the current price of 3,448 dollars. Mr Osei said Chinese average cost for producing coils was 3,016 dollars yet they sold to Ghanaian coil importers at 2,650 dollars which obviously showed that Chinese exporters enjoyed export subsidies or rebates. "Trade practices are classified unfair if the exporting country introduces a product into the importing country at less than its normal value," he said, adding; "that was technically dumping under World Trade Organisation (WTO) regulations".

Mr Osei said it was necessary for a WTO member to enact specific anti-dumping legislation but Ghana needed to have the technical and the legal capacities to establish dumping legislation. He said many countries had used the Anti-dumping Agreement to good effect adding that from 1995 to 2005, India imposed 279 anti-dumping measures and the United States of America imposed 211 measures to protect their domestic industries from unfair trade. Mr Osei said the Tariff Advisory Board (TAB) could not remain a referral and advisory body but to become an international trade commission with the flexibility to impose duties where dumping was established. He called on the Ministry of Trade and Industry to work towards the establishment of the international trade commission. "We have to decide as a country whether we want to have a manufacturing sector at all and actively support that sector to play its role," he said. Most of the MPs who contributed to the statement called on the government to establish the legal and technical capacities to enforce the anti-dumping measures. 23 Nov 10