Customs & Excise and Importers ? Duty & Tax episode

I would like to thank Mr. Sam Akwasi Yankyera the Assistance Commissioner of Customs Excise & Preventive Service for blowing a whistle on the fraudulent act by some Ghanaians at the Ports.

According to the article that was published on Feb. 23, 2006, the Government loses several billions of cedis through this fraudulent operation. Mr. Yankyera should get all the necessary help needed to weed out from the system all the perpetrators of this crime.

As we look into these malpractices, we should also ask ourselves why importers try to cheat the system this way. This will help to fix the problem once and for all.

The system that has been put in place by Ghana Customs & Excise to collect taxes at the ports should be overhauled. Those who live outside Ghana and importers have been complaining every single day about the way duty is levied at the ports.

When President Kufour came to Canada in 2000 during his first campaign for President, he was told of the problems at the ports with the expectation that if he was elected, he could address them. To date those problems have not been addressed.

In the NDC era, we were aware that our goods could be seized through unfair regulations developed by any Government official who was interested in the goods that were imported into the country.

Today we do not have such fear but the situation has taken a different turn that robs importers of their money and even their goods. The storage areas at the ports are always flooded with goods that could not be cleared due to heavy taxes. These goods are auctioned for a small fraction of the amount that their owners were asked to pay. It is rumored that they are auctioned to the cronies of government and custom officials.

I am not complaining about the percentage one pays as duty and taxes on the imported goods. This could be justified for a country like Ghana that has very little way of collecting revenue internally. If an importer is not registered to collect VATS, then the one should pay it at the ports.

What I am talking about is the ?Kalabule? way the Government uses to collect extra money from importers. I think the Government is cheating and robbing its citizens. After all it is the consumer who always suffers.

Importers are afraid to come forward to voice out what they go through for the fear that they would be picked on by custom officials if their goods arrive at the ports.

Like millions of Ghanaian both home and abroad, I am a victim of this kind of robbery by the Government.

There are two major ways that are being used to rob importers at the ports.

1. The re-evaluation and sky-rocketing invoices on imported goods by special hired employees at the Customs & Excise, with the view of robbing importers by every possible means. I call these people ?Kalabule Price Experts - KPEx?. 2. The delay in processing the taxes on imported goods. This makes sure that the grace period is used up and the extra days or weeks or even months that the goods are kept at the storage areas generate more money for the Government.

I make a business trip to Ghana almost every two years. In my studies, I found out that the area in the Ghana economy that my company can be of help is in Technology. I have invested some money to open up a Machine shop to build machines in Kumasi the same way as I do in Canada.

My first machine was Hydraulic portable sawmill that is in operation at Ejura. My next move was to find a simple way to provide extra or back up power (electricity) not only for the household in the remote areas in Ghana but more importantly to help the medium and small size companies in the manufacturing industry.

My strategy was to build portable diesel generators with welding capability at the machine shop in Kumasi. I felt this could also create jobs for the Polytechnic and technical school graduates. If all goes on well, the product could be produced in large scale to feed the neighboring countries.

I started this project by importing into the country 5 German designed 22 horse power single stroke water cooled diesel engines from China. The total cost of the five engines was US$1305.00 and shipping cost was US$350.00. Bringing the Grand total US$1655.00

The other components were 5 generator heads. These also come from an American base company in China. Total cost for the five items - US$1104.00. Shipping cost ? US$425.00. Grand total ? US$1529.00

The other items had already arrived in Kumasi from Canada. I took the risk not to pay insurance on all the items but Ghana customs added insurance cost on the value of the goods.

I planned to sell each completed item for 15 million cedis. In Canada I sell them for CND$2050.00.

First, the engines arrived at Tema port the first week of October, 2005. After five weeks of processing, I was asked to pay 9.5 million cedis on taxes excluding storage and other handling charges. The engines were valued at US$5,000.00. I felt I was being cheated.

The matter was brought before a Custom & Excise top official through one minister I know.

The Custom boss response was that since a junior staff had handled it, he could not do anything for the simple reason that it will be perceived as political interference.

Secondary, even though I had clearly detailed my intentions with the duty application form, the boss said the project could not be considered as an investment and therefore he could not give me a break on the taxes. I should therefore take the issue back to the junior staff to be resolved.

My concerns were not addressed. Since I had the manufacturer?s contact information and internet address on the IDF form, I was expecting the Custom boss to ask a junior staff to verify the invoice from the manufacturer or the source and charge me (the importer) some couple of dollars to cover the phone or internet services including employee?s labor hours. Why can they not do this simple thing to create jobs for Ghanaians? This will generate genuine revenue for the Government rather than ripen off importers.

Well I took the Custom boss?s word. Later I was told by a custom officer that the description of the item seemed like a generator and therefore I should re-apply with a better description. My custom broker did that. The process took over 4 weeks and still nothing had been heard. My custom broker received a word from the evaluation office that they could not figure out what the items were. I call the Custom office from Canada and explained in detail what those items were and my intention of importing them into Ghana. Another 2 weeks passed and nothing was heard. I called that office again to learn that, the person working on my file was on vacation. I got someone to give the file to the supervisor to re-assign the job to another person.

The generator head had then arrived so we applied for them to be evaluated. I waited for another six weeks until finally I got both values on the two items.

To my surprise the engines had again been categorized as a generator with a total value of US$10,050.00 and I was supposed to pay about 30 million cedis in duty and taxes excluding storage fees. The custom officer ignored all the description on the items and picked on one simple statement from the application of the prime mover - 16KW and ruled out that the item was a generator. For the generator head, duty and taxes came up to 8 million cedis excluding storage charges. I had had enough. I made my mind to re-direct the goods to Canada not knowing there were more surprises awaiting me. I was to pay 8 million cedis on the engines and another 4 million cedis on the generator heads for storage charges before I could ship the goods to Canada.

To cut matters short, I could clear the generator heads at the cost of 15.5 million cedis. For the engines, I was just waiting for them to be auctioned and see if probably I could win the bid. I later found out, that would not work for my benefit. As I lost all hopes, a custom officer (A Good Samaritan with a purpose) came to my rescue. He re-processed the value and now I have already spent 14.5 million cedis with a full assurance that I will get the engines. It is now about 6 months since the engines arrived at the Tema port.

In Canada I pay only CD$29.30 on duty and taxes on each engine and CND$22.00 on each generator head. It takes customs 2 or 3 hours to process it and about a day for my custom broker to get the items to my shop - about 3 hour drive from the port in Toronto. Less than 2 days after the goods arrive at the port, I receive them at my shop. Just compare this to what I am still going through in Ghana. Who is the cause of Ghana?s woes? Giving the comparison, is it not surprise that Ghana cannot easily attract foreign investors?

Today many companies from America and Europe have relocated to the Far East for a better competitive edge in prices. Prices keep going down and down. It will be unwise, cheating and robbery on the part of Ghana Customs & Excise to maintain their 10 year old price list to evaluate goods imported into the country. Today one can buy a latest computer from Dell for US$750.00. The same drugs manufactured in the US are sold cheaper in Canada than in US. US citizens drive over to Canada for their prescription drugs. The cost of a particular product from China can cost 3 or 4 times more in US or in Canada. Custom & Excise cannot justify the procedure it uses to evaluate the imported goods using a price tag on a product as a standard for the same or similar product.

One custom agent said. ?If even you bring an invoice from the heavens, those people out there will value the goods 3 or 4 times the amount on the invoice.? In this predicament, what do you expect them to do? Who was the first to be a crook?

I sold a used 5 ton Volvo truck which I bought from a farmer in Canada for CND5,000.00 to a friend for the same amount. He ended up in tears after clearing the truck from Tema port at the cost of 82 million cedis. The government does not have its own trucks to bring foodstuffs from the farms to feed the people in the urban areas. Neither does the government have any means of public transportation for the people besides the STC, yet when importers and those who live abroad import trucks and cars into the country, the government finds other means to rip them off of their goods and money.

A friend who owns a financial business and a used cloth factory in Canada purchased some printing ink for CND$2,000.00. He paid duty and taxes on the item for 15 million at the Tema port. Why should this be so?

Someone I met in Toronto was lamenting over his grieve and cursing the Ghana government. He was to pay 110 million cedis for duty and taxes on his SUV van. When he could not pay the amount, the van was auctioned for a small fraction of what he was asked to pay in duty and taxes. Is this not robbery? What a shame.

The cases go on and on. They can not be contained in this small article. A great number of Ghanaians living broad and almost all importers have something to say about this cruel act. This situation has compelled the importers to flood the Ghanaian markets with poor quality and used products even pharmaceutical products and used cloths - underwear.

Government officials should remember that their unfair activities at the ports are causing a a great deal of suffering to Ghanaians both home and abroad. A country like Ghana, a US$1,000.00 means nothing to them. You ?melt? US$1,000.00 into cedis and within a week or two it vanishes into the air confirming what the rich in Ghana have been telling us, that ?you are wasting your time abroad.? The cost of living in Ghana is so high I cannot compare it to any country. It is all because of the unfair activities that go on at the ports by Customs & Excise.

My goal is not to point a figure at the custom officers. They only operate by the rules of their superiors. If the system that has been set up by the government is cheating importers, what do you expect them to do? Of course they will try to help the people and as the saying goes, ?Those who prepare perfumes do not watch their hands in vain?

What has been uncovered by Mr. Yankyera is no different from what the Government is doing to its own citizens. The Government unfair activities at the ports call for those fraudulent operations by importers.

Five items which I have estimated to cost 15 million cedis each in retail has now cost me over 40 million to clear them from the port. There are also other materials and manufacturing cost besides the cost of the major components. All these costs have to be paid by the consumer. It is always the consumer especially the poor who suffers. They cry all the time and complain of money. Anytime you pick the phone and the call comes from Ghana, your heart jumps up. You know the message is either ?Send us some money or someone is dead, we need some money?

With better planning, the government can collect revenue from different areas in addition to the ports. What about property tax, car licensing plates and drivers license renewals, business taxes and Traffic offenses? With time, citizenship ID could be issued out and among other things introduces income tax for every individual. The ports will be relieved of all these tensions between importers and Customs & Excise. Goods will flow into the markets at cheaper and competitive prices.

We can and must solve this problem by putting in place a simplified transparent process cheaper import duties. This will lead to an increase in revenue for government, more investments and thus create more jobs that will help strengthen the economy. As Lincoln once said, ?You cannot help the poor by discouraging the rich?

Views expressed by the author(s) do not necessarily reflect those of GhanaHomePage.