Spare Parts Duties: Consumers To Enjoy Reduced Prices as Tax Removal Takes Effect This Week

Government has expressed hopes that buyers and users of vehicular spare parts in Ghana will soon start to enjoy reduced prices in the market. This comes after the Parliament approved the Customs Amendment Bill 2017 that will allow for the removal of import duties on vehicle spare parts.

The Customs Amendment Bill 2017 was passed after a prolonged debate, with the minority insisting the bill is unconstitutional and a breach of the ECOWAS treaty. They also questioned government’s failure to remove all spare parts taxes as promised in the 2017 budget statement, as well as their failure to establish measures to ensure that the tax removal will reflect on the general market price of spare parts.

Deputy Minority Leader James Avedzi vehemently argued that the move will only benefit spare part importers and not the ordinary Ghanaian, as the bill did not make provision for a mechanism to ensure that the removal reflects on prices of spare parts in the open market. According to him, there is no point removing the duties if the consumers will not in turn enjoy price cuts.

Rejecting the majority’s insistence that “the market is active and will react to itself”, Mr. Avedzi stressed that the government must ensure that as the importers enjoy the reduction in duties, they must also reduce the prices of the parts to avoid enriching only the importers to the detriment of the consumers.

However at the end of the day, the ‘ayes’ had it, and the bill was passed.

Speaking on the sidelines of a two-day sensitization program for traditional leaders on measures to fight illegal mining held in Accra on Monday, 10th July, the Vice President, Dr. Mahamudu Bawumia indicated that the abolishment of import duties on vehicular spare parts will finally take effect from this week onwards.

According to Bawumia, the spare parts tax removal is part of government’s initiative to facilitate the business of importers in the automobile industry.

Tax Cuts and Removals

As part of the 2017 budget statement, the Finance Minister Ken Ofori Atta proposed reduction and removal of some taxes, including those of spare parts, to help reduce cost of doing business in the country as promised by the Akuffo Addo government.

See Full List of Reduced and Abolished Taxes

Mr. Ofori Atta had explained that some of those taxes which were introduced by the erstwhile National Democratic Congress (NDC) government to raise revenue, have proven to be unprofitable as they have turned around to burden the private sector, as well as stifle their development.

Although the Parliament approved the proposals then, there was still the need to amend the country’s laws to allow for the import duties on the spare parts to be removed. Now, with the approval of the Bill, customers are set to start enjoying reduced prices in the spare parts market.