It appears that spare parts traders may require more than tax cuts on imports if they are to reduce the prices of their wares for consumers.
According to a tax analyst, William Owusu Demetia, the decision to reduce prices will also be influenced by a combination of factors including the cedi depreciation and a general improvement in the economic condition.
His comments come at a time that consumers of such spare parts goods have complained about the seeming delay by the traders in reducing their prices despite the tax cuts.
Among the numerous tax cuts announced in the 2017 budget is the removal of taxes on imported spare parts.
But four months after the implementation of this directive, consumers are yet to benefit from the reduction.
Reacting to this however, William Demetia explained to Citi Business News an unstable currency plus other economic factors may make it difficult to drastically reduce the prices.
“Even if they are enjoying the tax rebate, the question to ask is what is the cedi exchange rate to the dollar; if the outcome indicates that the situation has worsened, then it simply means that the expected reduction of the prices may not happen. So these are things that we need to look at. It is a combination of things that one needs to look at when it comes to pricing; the tax element sometimes helps but it is not the only thing to consider,” he argued.
Even before the official announcement of the tax cuts by the NPP government, the spare parts traders announced reduction in prices of some of their wares in anticipation of the fulfillment of government’s promise.
But Mr. Demetia believes the businesses may eventually review their prices to reflect the drop in operation cost granted other indicators become favourable.
Meanwhile the Ghana Union of Traders Association (GUTA) has been making fresh appeals for the government to scrap another component on imported wares which is a special import levy.
By: Pius Amihere Eduku/citibusinessnews.com/Ghana