The news that the nation is losing a whopping $40 million annually mainly as a result of the nefarious activities of smugglers in the rice industry is quite disturbing and irritating.
According to the facts available to the DAILY GRAPHIC (check today’s lead story), about one third of the nation’s total rice import is allegedly smuggled into the country. In other words, as much as 100,000 metric tonnes of the estimated 350,000 metric tonnes of the rice we import is brought in through smuggling, thus evading taxes and other tariffs due to the nation.
Why the resort to smuggling? Well, we are told that Ghana operates a higher tax regime on rice imports as compared to say, Cote d’Ivoire, and this makes smuggling a very lucrative business to the detriment of our economy.
In fact, it is learnt that while a Ghanaian rice importer is confronted with a total tax regime of 35 per cent — 20 per cent Customs Duty, 12.5 per cent VAT and 2.5 per cent National Health Insurance Levy ((NHIL) — our neighbours in Cote d’Ivoire only have to contend with a Customs Duty of 12.5 per cent.
So the inherent difference of 22.5 per cent in the landing cost of the product is what is said to be motivating many people to take to smuggling. The implications of this are two fold. In the first place, Ghana is losing millions in either uncollected taxes and duties, as well as losing revenue from decreasing importation of legitimate rice.
But that is not all. The worse fear of many industry players is that with the price of rice rising on the international market — an average of about $800 and $900 in the last four weeks — it would create an even more conducive atmosphere for smuggling to go on unabated.
What do we do under the circumstances? How do we abate the smuggling or stop it altogether?
The DAILY GRAPHIC thinks one area that must immediately engage the nation’s attention is our high tax regime on imported rice. We seriously believe it would not be out of place to review our tax regime downwards to make the smuggling of the product unattractive.
We recall efforts by the government to motivate cocoa farmers to produce more and also make the smuggling of the produce across our borders unattractive by the annual adjustments in the producer price of cocoa.
This intervention has not stopped the smuggling across our borders but the annual price adjustments offer enough incentives for the farmers to sell their beans to local buyers.
In the same vein, the DAILY GRAPHIC believes that if the authorities ensure that there is no tariff differential between the import of rice into Ghana and Cote d’Ivoire, it would work the magic we all so anxiously desire.
Furthermore, we demand the tightening of security at our boarders where smuggling is said to be rife. Some of the areas mentioned include Elubo, Dadieso, Nkrankwanta and Enchi and we must take drastic measures to curtail the smuggling and collect duties on imports from Cote d’Ivoire.
It is no secret that some of our customs officials are having a field day at their various duty posts and it is time such nation wreckers were weeded out without any hesitation whatsoever.
The DAILY GRAPHIC, however, believes that the long-term solution to the smuggling problem is to implement proper development plans to stimulate local rice production. For too long, we have paid lip-service to the local rice industry and the earlier we wake up from the slumber, the better it will be for all of us.
This is not to say that nothing is happening to revitalise the local rice industry. Perhaps action so far has not been able to encourage farmers to venture into this sector. Let us provide the needed incentives to produce more to feed ourselves and for export.
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