Friday, November 11, 2011

Heavy Tax Burden, Imported Goods Killing Local Industries

"In this world, nothing can be said to be certain except death and taxes" Benjamin Franklin


[Gambia News Online] The heavy tax burden on local manufacturing companies in The Gambia and the dumping of cheap imported goods in the country is ravaging and virtually killing the local industry, manufacturers in the country have lamented.

Some member companies of the Gambia Manufacturers Association (GMA) told Gambia News Online that the number of taxes imposed on them is enough to put them out of business, especially at a time when they have very low sales as they find it very difficult for their locally produced goods to find a mark in the country’s market which is flooded with imported goods at a cheaper price than locally produced ones. 

“The key issue affecting Gambian manufacturing companies is the heavy tax and the stiff competition from the imported goods,” said Saja Sambou of Gambega, a member company of Gambia Manufacturers Association (GMA). 

“We are paying so many taxes, and electricity cost is also high. In light of all this we face very intense competition from Brand B products.  By Brand B products, I mean imported goods; products that are being produced locally and a similar product is imported from somewhere and dumped into the market at cheap price.” 

Asked how can goods imported from far away be cheaper than those produced locally, Mr Sambou said:  
“How are they doing that is because they get the products into the country at a cheaper price; I am talking about the import duties, it’s very low for them and sometimes they undervalue their products and pay less so they are able to put it into the market and sell it cheaply.

“For instance, at Gambega we produce our own beverages like Fanta, Coco cola, etc and somebody is bringing similar products from Asia because the cost of importing some of these products from Asia is cheaper. If for instance, we are selling our bottle of soft drink at D10, the importers will sell theirs for D8. They are able to do it because they are not incurring the cost that we factor into the price. They are not paying electricity like we do, they are not paying to produce, they don’t pay the numerous taxes that are levied on us, they don’t have too many staff to pay salary, they don’t have other overheads like machinery, spare parts, and raw materials. And the way they bring these products into the country is so cheap that they can sell at a cheaper price and still make their margin. We cannot come as cheap as they do because we incur so many overhead costs before the good is finally produced.”

According to Sambou,who is the Human Resource, Public Affairs and Communication Manager of Gambega, every country is protecting their local industries, and unless local manufacturers are protected for them to grow, the economy “will not grow fast as the local companies will not be able to provide more employment to the people” the way it should be.  

“Importers in this country import as they like,” said Louie Mendy of Moukhtara Holding, a Gambian company that produces sweats, timber, etc.

“As an importer, you import your container from Belgium or China or anywhere to the ports, from the ports to your store; you didn’t employ any Gambian or may be only two.   From the store you start selling.  They incurred less cost compare to local manufacturers.”  

Mr Mendy said the local manufacturers incur different types of cost including rent, electricity, salary, numerous taxes, transportation, gas oil, etc.

“All of these from the small companies, how can we survive?  This is why most of the Gambian companies fail after some years of operations,” he remarked.

He said many Gambians are sitting at home without job not because they don’t want to work but if you asked them why they are not working most of them will said the company they have been working for has closed down.

He said the government is allowing people to imports good that are produced locally.  For example we (Moukhtara Holding) are producing sweats and other people are still importing it from Senegal, even from Europe

“We have always been lamenting that the importers are killing the local companies but the situation is not changing,” Mendy bemoaned. 

“The authorities should come to the aid of the manufacturers by stopping the importation of goods that are produced locally.  The producers in the Gambia are really trying but they are suffering because the government is not helping.  Government is not helping because if they are to help let them stop importation of goods produced there.”

Taxation burden
On taxes, Saja Sambou said manufacturers in the country are face with various types of taxes, “nothing less than 20”. 

The numerous taxes impose on manufacturers, according to Sambou includes sales tax (which is to be replaced with value added tax in 2013), corporate tax, income tax, tax on raw materials.

“There is tax on finished products even before you start selling you have to pay tax for them, so you pay tax whether you sell or not.  After selling it you also have to pay tax. We are paying tax on raw materials, for instance at Gambega we pay tax on the raw materials use in producing the drinks we also pay tax on the bottles that we are bringing into the country,” Sambou pointed out, adding: “Tax is the big challenge that the manufactures are grappling with.”

He further said:  “You know what it means when manufacturers are in a problem to the point that they are not able to break even and when they are to close down so many people will be without job.  The Gambia manufacturing industry is employing so many people; cumulatively the number of people employed by the manufacturers in the country is in thousands.  Now imagine all those people going home without job, you can think of the multiplier effect of that on their families, their children, and all other relatives.  

So it’s the bigger picture that the government have to look into properly with all the stakeholders to see how we can minimize taxes to able to help manufacturers grow their business and expand because the more manufacturers expand the more services they give to the people, the more people we employ and the more revenue for everybody.”

 “We are not saying tax is bad, no tax is good but let them reduce it for local manufacturers,” Louie Mendy said.

At Moukhtara, we employed 200 hundred Gambians, we pay so many taxes and we have not having sales as usual, and when that should continue the company will reach to a point it cannot continue operations, now in that case, what happens to the people that we employed, they will all be sitting home without job, just think of the effect of that, Mendy explained.

He said: “Already the numbers of taxes are too many, but even with that, everyday the Gambia Revenue Authorities, the body mandated with the responsibility of tax collection among other things, is bringing in new taxes, new system of paying tax.  Everyday new tax, how can we grow?  I am not saying tax is not good, but let it be reduced for Gambian producers.

“Tax is number one business killer in this country.  The number of taxes in this country is enough to kill any business.”

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