Managing director of Intercity State Transport Company (STC) Nana Akomea, has expressed the need for government to institute a national industrial policy which will address issues associated with taxes on imported products and competitiveness of local producers.
According to him, the conversation on the removal of taxes on sanitary products, particularly, AGI’s aversion to the tax removal proves the impact the move could potentially have on industries.
He revealed that issue bordering on the taxes on sanitary pads is a “complex” one as the products are necessities for women and girls and not meant to be luxuries and unaffordable.
Mr Akomea explained the complexity has to do with the policy regime and the pricing of sanitary pads because the issue is that they are not readily available, particularly to women who are deprived because of the pricing.
“It actually goes to national policy and what should be a national industrial policy. If you move beyond sanitary pads, you’ll see a lot of products that come into this same category of complexity… The argument is that there is local production of sanitary pads. Now, there’s the imported sanitary pads so there’s a tax imposed on the imported product…”
Nana Akomea
Tax imposition on sanitary pads
Elaborating on AGI’s stance, Mr Akomea noted that the idea of putting a tax on an imported product where there is local production is to protect the local production, whether Faytex or other brand. He highlighted that these companies have employed Ghanaians, and there is the need for a policy to protect them, which government has done by putting a tax on the imported sanitary products.
However, he noted that when this happens, the price of the imported product will go up and make the local products cheaper so Ghanaians will patronize the local product.
“The local product really benefits the economy. But industrial policy should be a combination of competitive economy, and national support… We expect local companies to be competitive so we can bring out the best product for the Ghanaian consumer, but we also want them to be protected in such a way that the protection doesn’t kill them.”
Nana Akomea
Despite the need to support local industries to grow, Mr Akomea stated that it seems that even though there’s support, the local industry is not able to grow to eventually be on their own and to sell at prices that are affordable and in quantities that are available. He indicated that they continue to depend on the support from the state in the form of taxes on imported products.
“… So, when you remove the support, they then begin to have problems. Otherwise, if you take sanitary pads for example, there’s a tax on imports so the local companies could have space to grow, be efficient and produce in quantities that can supply the Ghanaian market. So, the taxes should be for a period by which time you expect the local production to develop the capacity to meet the demand and to compete with the imports. To the extent that they are not able to meet the demand, even though the imports are more expensive, people would have to buy them because the local capacities have not been enough to satisfy the market at affordable prices.”
Nana Akomea
Furthermore, Mr Akomea highlighted that due to the fact that people are forced to buy the expensive imports, hence the calls for its removal, there is a dilemma with its impact on local industries as well.
He underscored, that the policy should ensure that government is giving the local producers support by imposing taxes on the imports. However, the “state should make that while giving the local producers support, they do the things that can allow you mature”.
“So, that’s how industrial policy should be. I don’t know if we’ve been successful in fashioning out such an industrial policy or following it. Because many of the successful countries that have industrialized after Europe, they did a combination of competitive local industries with state support. The state support takes the form of taxes on imports, technical, managerial and financial support to the local industry so they can also thrive.”
Nana Akomea
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