Car Dealers Bare Teeth Over 35% Penalty On Duty

The Vehicle and Assets Dealers Union of Ghana (VADUG) has expressed utter dismay over government’s decision to slap 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,a cc 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 Member Parliament for Assin Central, 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 contribution 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.