Prices up by 20.5 percent as 3% VAT flat rate takes off

Prices on goods have gone up by about 20.5%, following the implementation of the 3% VAT Flat Rate which commenced on July 1; the General Secretary of the Food and Beverages Association of Ghana, Samuel Aggrey has disclosed.

Mr. Aggrey’s assertion follows an earlier meeting of businesses with the Vice President, Dr. Mahamudu Bawumia, calling for a suspension of the implementation of the 3% VAT Flat Rate.

Explaining the circumstance that have led to the increase, Mr. Aggrey told Citi Business News business owners are simply passing on the cost to consumers.

He maintained that importers and distributors should not be blamed for the increase in prices as all efforts targeted at suspending the implementation of the tax proved futile.

“This is what government wants, we keep telling them. We have engaged them severally telling them that this will not work it will not be fair but they are not listening so what it means is that we have to go ahead otherwise we will fall foul of the law whiles we are still engaging them, we will have to apply it,” he warned.

Mr. Aggrey pointed out that goods which are already on the market as well as those yet to be imported will be affected by the tax.

“For the category of goods that will be affected it cuts across board, nothing will be exempted because once you’re trading in business it means that whatever that you are bringing or supplying will have to attract the 3%, but it goes beyond the 3% because when you are doing your analysis you need to add the 3% at the end of it and therefore you see that it’s not 3% anymore but then it’s more than 8 % sometimes even 15% so that is how it’s going to be,” he warned.

He stated that there must be a pragmatic way to deal with the issue since Ghanaians are going to be worse off.

Outlining the effect on ordinary Ghanaians, Mr. Aggrey observed that cost of living is going to go up as the purchasing power of consumers is reduced.

He appealed to government to continue engaging business associations to find a permanent solution to the issue.