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Tax stamp, zero-rate VAT on textiles not enough – Labour Federation

The Ghana Federation of Labour (GFL) says government’s proposal to extend the tax stamp to textiles and use of a zero-VAT on supply of locally made textiles would not solve the sector’s problems.

Mr Ken Offori-Atta, Minister of Finance and Economic Planning, on Thursday announced during the 2019 budget reading that “in order to curtail smuggling and counterfeiting in the textiles industry, it is proposed that the tax stamp policy be extended to the textile industry”

The Finance Minister further stated that “government proposes to zero-rate VAT on the supply of locally made textiles for a period of three years”.

Mr Abraham Koomson, General Secretary of the GFL reacting to the 2019 budget reading told the Ghana News Agency that government must rather address the numerous challenges facing the sector.

Mr Koomson stated that the industry’s problems included paying of import duties on raw materials, high utility bills, high labour cost among others.

He added that other challenges were counterfeiting and pirating of designs, as well as smuggling of products into the markets and “no effective measures by government to check it”.

“So if that zero VAT is even applied and nothing is done by government to check the illegal imports and sales, the pricing of local fabrics won’t be competitive”, stressed.

According to him, information from Dr Peter Quarters ‘, “Report on the future of African Textile Industries-October 2005” revealed some of the reasons accounting for the wide disparity in product pricing included high cost of raw materials and the full cost of electricity used for manufacturing being borne by manufacturers unlike their Chinese counterparts.

He added that while steam generation was supplied by a centralized generating plant through pipelines to factories free of charge, the textile manufacturers in Ghana must own their own and fuel its boilers at its own cost.

Mr Koomson further noted the report indicated that whereas importers of China’s textile evaded taxes and tariffs, the manufacturers in Ghana met all tax obligations which included SSNIT, Excise duty, VAT, and NHIS which accounted for about 40 per cent of production cost.

Mr Koomson indicated that “we can’t understand why government, knowing these disadvantages to the local industry would abolish the anti-textile piracy task force”.

He called on government to bring back the anti-textile piracy task force to ensure sanity in the industry and prevent people from pirating the designs of the local textile manufacturers while arresting those who smuggled products into the country.

Source: GNA

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