FABAG Calls for Urgent Tax Relief to Complement Cedi Gains

The Executive Secretary of the Food and Beverage Association of Ghana (FABAG), Sam Aggrey, has urged government to introduce immediate tax relief measures to ensure that the recent appreciation of the cedi translates into meaningful benefits for local businesses.

Speaking in an interview on Thursday, July 3, Mr. Aggrey emphasized that despite the cedi’s recent recovery against the US dollar, businesses remain burdened by a punitive tax environment that continues to choke growth and profitability.

“Dollar depreciation is not being felt at all, if you look at what has happened in the past, where the cedi depreciated from ¢3.80 to as high as ¢16, you can imagine the extent of losses suffered by investors and the country.”

Aggrey noted that many businesses are still reeling from the devastating impact of previous currency fluctuations and cost increases, arguing that the modest appreciation seen in recent months is insufficient to repair the structural damage caused.

“It’s like being hit by one bullet and then hit again. While some may see it as good news, others have lost heavily,” he explained, describing the current situation as a bittersweet moment for Ghanaian enterprises.

Tax Burden Eclipses Currency Gains

According to FABAG, the average business is overwhelmed by what Aggrey described as “approximately 21 different taxes on a single imported item,” rendering the current fiscal environment unsustainable.

“We are looking at where government will also come in, as it were, to reduce certain taxes for people to truly feel the effect of the cedi’s appreciation,” he said.

He criticized recent policy decisions, including the reversal of the benchmark value discount on imports, as having compounded the economic pain for businesses.

“We warned the Finance Minister when he indicated plans to implement 100% of the benchmark value. We told him it would be disastrous for the economy, but our concerns were ignored,” Aggrey lamented. “At that time, the cedi was around GH¢11 to the dollar. After the tax increases, we saw the cedi continue to depreciate, leading to higher import duties and further hardship for businesses.”

Call for Structural Reform

Aggrey argued that macroeconomic stability, while important, must be matched by real sector reforms if businesses are to thrive. He called for a comprehensive overhaul of Ghana’s tax regime especially those targeting the import sector.

“It will take decisive policy shifts either stepping back or moving forward to reduce these taxes as we discussed during campaign engagements. An overhaul is needed to bring lasting relief to businesses.” he said.

Cedi Gains Must Be Matched by Policy Action

With the cedi enjoying relative stability in recent weeks thanks in part to inflows from the IMF and improved fiscal management FABAG insists that government must not miss the opportunity to implement complementary tax measures that stimulate growth.

“Stability is only meaningful if it empowers real businesses. Otherwise, the appreciation of the cedi becomes a statistical illusion, not a lived reality.” Aggrey concluded.

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