Vehicle Dealers Union dismayed at 35% penalty duty on imported used vehicles
The Vehicle and Assets Dealers Union of Ghana (VADUG) has expressed utter dismay over government’s decision to slap a 35% penalty on duty on imported used vehicles which are between one to five years old.
The dealers who are already paying high duties on such vehicles said the new policy will collapse their businesses in favour of vehicle manufacturing and assembling companies in the country.
Deputy General Secretary of the dealers, Clifford Ansu, disclosed this to Joy Business at a meeting in Tema with Assin Central MP, Ken Agyapong on Customs (Amendment) Act 2020, Act 891.
“The amendment intends discouraging importation of secondhand vehicles and encourage automobile assemblers”.
“We’re against this aspect of the law. For instance, a vehicle between 1-5 years attracts a penalty of 35% on duty. We’re even struggling with the existing duty and when it is implemented before the year ends, it will surely collapse our business,” he cited.
Amended Act 891 aims to offer some incentives to automobile manufacturers and assemblers registered under the Ghana Automotive Manufacturing Development Programme, ban the importation of salvaged motor vehicles and specific motor vehicles over 10 years of age among others.
In 2019, the Ghana Automotive Manufacturing Development Programme was launched in a bid to promote automobile manufacturing in the country, feeding the local and West African markets and contributin to the country’s economy.
This policy in its first three years is expected to cost ¢802,251,785 in custom duties and taxes with additional revenue from duties on vehicles not covered by the programme.
For these car dealers, government has taken an entrenched position.
“We recently met Minister for Trade and Industry, Alan Kyerematen, on this issue but he made it clear to us that nothing will stop implementation of this law and if we want any changes done, we need to go through parliament”.
Car dealers bare teeth over 35% penalty on duty
“Despite being the sector minister, he declined helping us get our message across. It appears government has taken an entrenched position,” Mr. Ansu stated.
According to him, with existing 10% on some vehicles, VADUG receives complaints over how those who import these vehicles could recoup their investment as banks hardly give loans to purchase a vehicle which is over five years.
The union is asking government to allow importation of used cars to help those who do not have money to purchase new ones being assembled in the country.
Clifford Ansu urged the assemblers to expand their market to the sub-region and encouraged government to formulate policies that benefit the economy.
“Government must remember that these investors will always repatriate their money and it will continue putting pressure on the cedi,” he advised.
Meanwhile, Member of Parliament (MP) for Assin Central, Ken Agyapong disagrees with government’s position on imported used cars.
Car dealers bare teeth over 35% penalty on duty
The MP said it is not right to introduce policies that are not friendly to the local businesses.
“Wherever the manufacturing and assembling companies come from there are used cars companies there but why are they not telling their governments to slap higher tariffs on the used cars?,”
“This is clearly due to the fact that not everybody can buy a brand new car. If you have locals dealing in used cars, you don’t come up with punitive measures because you’re asking automobile companies to invest in Ghana,” he continued.
Ken believes Ghana can think of such policies if car manufacturers can meet demand and make it affordable for all to buy.
“How can you slap additional 25% on 1-5 years cars and leaving 6-10 years cars? We must always put the citizens first in every decision we take as this is the case in every country. It’s quite unfortunate that it is only in Ghana we tend to put foreigners ahead of our own people,” Ken bemoaned.
He cited an instance where he brought a Rolls-Royce in 2010 to buttress his point.
“Despite having the Rolls-Royce for 12 years, its mileage is still 4000 because I don’t use it frequently. It baffles me how such a vehicle cannot be imported as against 2-year-old vehicle which has 50,000 mileage,” he added.
With the exception of his steel plant under 1D1F, Ken Agyapong who is also a businessman said he pays high duties importing his stuff just like other Ghanaians, but foreigners are given waivers from parliament.
He was in disbelief as one of the reasons for restricting the car dealers was the issue of importing with the dollar.
“What about the foreign companies who change cedis to dollars and repatriate?,” he quizzed.
Unhappy Ken Agyapong was surprised at the posture of government on used cars as he bought old pickups to help the government whilst in opposition at the time to campaign because they didn’t have money to buy new cars.
“Some of the vehicles I bought for the party were as low as $1,500 and we campaigned with it for eight months to emerge victorious,” he said.
According to him, the policy will contribute to unemployment in the end.
Ken Agyapong used the occasion to calm the car dealers who are threatening to demonstrate and asked them to refer their issue to the Speaker of Parliament.