Fumigation Levy on Imports and Exports to take effect on March 1, in addition to Tax Stamps and ECOWAS CET levy? But Contract for Fumigation Exercise very troubling.

March 1, 2018, looks set to be a date importers will wish never came. On that day, two new tax policies will be out doored- the excise tax stamp and the Harmonised ECOWAS Common External Tariff (CET). Importers have asked for leniency. But a third levy for fumigating containers and their contents is in the works.This is a tough balancing act for the country’s finance minister, whose basket of promised social goods need sufficient cash, but at the same time he needs to ensure the private sector is not unnecessarily overburdened to achieve the political goals.

It does seem until the local business environment is deliberately induced to boost domestic enterprise and manufacturing that can compete with basic goods and services we import, there would only be the option to tax the joy out of import business. That is assuming all the taxes so imposed go into the government’s vaults. Recent records of a 34.5% year-on-year increase in port revenues could actually be double had the processes accompanying the paperless system been fully deployed by port officials.

In any case, the fortunes of the importer may actually be dwindling with yet another Fumigation tax. The cargo fumigation levy had been contemplated under the previous administration which did not see the light of day because of a change in government. Now though it has been given full support by the current administration- The fumigation of cargo is to be undertaken by a Turkish company- The Turkish company is the service provider with the Shippers Authority as client and the Ghana Health Service as health regulator. All stakeholders in the import business, especially freight forwarders have been served notices to register online by March 1, 2018, in order to pay $5 per each passenger car imported and disinfected. All other vehicles will pay $10 each. It is envisaged that all containers for imports and exports will be subjected to similar unspecified fees and could be higher. These charges DO NOT include VAT or any other tariffs government may impose.

There is nothing essentially wrong with disinfecting cargo as disease agents can be transported to hitherto safer environments. However, it is important to ask the critical question of how unique this service is that it merited a sole-source procurement process which imposes very unfair terms on government’s agencies and by extension on importers.  The fees seem to have been solely determined by the service provider. Article 4.9 of the agreement states ‘’ The Ghana Shipper Authority shall ensure that the SERVICE PROVIDER is placed on the existing mandatory electronic platform for the collection of fees and charges that have been determined by the SERVICE PROVIDER to ensure  that all imports  and exports subject to the GRA Customs regime pay the fees stipulated in this Agreement’’.

The contract says that the service provider of the fumigation services shall conduct business at our existing ports, and any other ports we will build in the future for the next 25 years with an option for a 10-year extension. The demand for extension is skewed in favour of the service provider even as we are yet to determine its capacity. Sadly, the parties to this contract ‘’acknowledge that the service provider shall NOT be liable for any outbreak of foreseen or unforeseen epidemic, diseases, etc’’ Reference article 3.7 of the agreement).  Surprisingly, the agreement states that ‘’ the service provider has the right to assign, transfer all or in part of any of its rights arising out of this agreement’’. 

For a country that purports to be interested in ensuring skills transfer and some amount of local content, it is sad that a service that is not unique to be provided by an external company under these worrying circumstances certainly is a call to death of budding and experienced local enterprises.  

There is more, but suffice to say that when this project was contemplated under the previous government, the Attorney-General then, Mrs., Marietta Brew Appiah-Opong cautioned the then Ministry of Health in her legal opinion about the excesses related to parliamentary approvals, fees, and charges, responsibility for externalities such as disease outbreaks and crucially the duration of the contract.  Mrs. Brew Appiah-Opong offered economically sound advice on how to proceed with the agreement to ensure Ghana’s public-private partnership and local content mantra was given a befitting facelift with this project. I agree with her legal opinion. I am not sure her opinion was factored into the June 23, 2017, agreement under the new government.  I am not sure the current Attorney-General, Ms. Gloria Akuffo has seen this agreement. If she hasn’t she should. Officials of IMANI are still demanding answers from those who signed this contract.