When the Finance Minister Ken Ofori-Atta presented the Mid-year Budget to parliament, he mentioned that beginning July 2018, the Ghana Revenue Authority (GRA) will implement a new system—the Cargo Tracking Note (CTN).
The CTN will enable GRA to close the information gap between Ghana Customs and trade partners, and ensure the correct classification and valuation of all imports.
This system, Mr. Ofori-Atta said, will prevent clearing agents and some importers from colluding to provide false invoices which leads to huge revenue losses to the state, estimated at some US$8 million monthly.
However, since the implementation of the CTN, some trade associations have launched a strong opposition to it, warning government to reverse the policy or ‘see red’.
For example, about 800 corporate entities in the freight fraternity have issued a one-week ultimatum for government to suspend implementation of the CTN or face a shutdown of the freight system.
According to them, all information to be provided on the CTN is already on the manifest; hence, there is no need to set-up another platform to do what is already in place.
“We have resolved that we are going to stop work across the country from Monday 27 August, if government does not suspend the CTN for further consultations”, President of GIFF, Kwabena Ofosu Appiah, said this last Monday.
The freight fraternity is made up of the Ghana Institute of Freight Forwarders (GIFF), Association of Custom House Agents of Ghana (ACHAG), Freight Forwarders Association of Ghana, and the Customs Brokers Association of Ghana (CUBAG).
The Ghana Union of Traders Association (GUTA) has also called for the suspension of the Cargo Tracking Note system, saying, decision to implement it was not properly communicated to the stakeholders involved.
“Government must meet with all relevant stakeholders to see the set goals for the benefit of all. In view of this, we will like to appeal to the president of the republic of Ghana, through the good offices of the economic management team to suspend the implementation until further deliberations are held with all relevant stakeholders in order to achieve the set goals for the benefit of all of us.
If these concerns of the trading public are not given the serious attention they deserve, it’s our resolve, then, not to accept the implementation,” President of GUTA, Dr. Joseph Obeng, said at a press conference in Accra.
Meanwhile, shipping lines operating in the country have served notice that they will not load cargoes which do not come with the Cargo Tracking Note (CTN) at the various ports of loading effective Monday, August 27.
A case for its implementation
But the question is: will the CTN implementation be in the interest of the greater good and benefit the economy or it should be suspended for the benefit of a few? A look at some happenings at the ports will provide us with a fair answer.
Investigations by the B&FT have revealed that large rice importers in the country are cheating and making away with over US$21million annually — mainly through under-declaration and misclassification of products— at a time government needs more revenue to carry out its projects.
In the case of under-declaration or under-invoicing, the importers are able to beat the system by declaring a price lower than how much the rice was bought at source.
For example, in June 2017 for a quantity of 500 1kg bagged fragrant rice bought by one of the importers in Vietnam at US$572 and valued at US$286,000, the importer under-declared it at US$440— giving it a total value of US$220,000.
Another corrupt strategy that some of the rice importers are using is misclassification. Under this practice, importers do not state the right classification of the rice in order to dodge taxes.
For example, one company that brought in long-grain fragrant rice declared it as white rice at Customs, thereby, paying lower duty than expected.
Conservative estimates made by this paper show that government loses on average US$21million annually from just these two corrupt practices—under-declaration and misclassification.
It is also reported that, the GRA Customs Division has missed its annual revenue target for two consecutive years— 2016 and 2017.
In 2016, the revenue authority was able to collect GH₵10.3 billion out of a target of GH₵10.82 billion, representing a deficit of GH₵495.8 million or 4.6 percent.
The following year, 2017, was worse as the GRA Customs Division collected revenue of GH₵12.6 billion out of a target of GH₵13.94 billion, which represents a deficit of 1.25 billion or 9 percent.
What is more, this and many other lapses in the revenue collection system have affected government’s revenue target.
From Jan-May 2018, according to the Mid-year Budget report, the fiscal performance shows that total revenue and grants fell short of target by GH¢1.42 billion, 0.6 percent of GDP, while total expenditures were below target by GH¢796.5 million, 0.3% of GDP, resulting in a cash fiscal deficit of GH¢6.37 billion 2.6 percent of GDP, against a target of GH¢5.73 billion, 2.4 percent of GDP.
What this simply means is that, government is unable to raise enough domestic revenue to finance its projects, mainly due to revenue leakages.
From these analyses, the CTN will address a very serious problem at the country’s ports, hence, the trade associations who are trying to frustrate the smooth implementation of the system, must back off if they really do not have anything to hide.
This is not the only country where such a system has been implemented to check fraud at the ports and also shore up revenue for the economy.
The CTN is not evil. It has come to stay and its enormous benefits to the economy should surpass all other interests.