The plastic manufacturing industry in Ghana is facing a major crisis as the government’s recent decision to impose a 5% tax on plastic products has led to threats of shutdown from plastic manufacturers. This development has raised concerns about the potential economic repercussions and the broader impact on employment and the environment.
The tax, which was announced by the Ministry of Finance as part of the new fiscal policy, is aimed at curbing plastic pollution and generating additional revenue for environmental initiatives. However, industry stakeholders argue that the measure will have adverse effects on their businesses and the economy at large.
The President of the Ghana Plastic Manufacturers Association, Ebo Botwe, stressed the urgency for the government to reconsider its position as he called for renewed engagement with all stakeholders to prevent the potential economic fallout from this planned production shutdown. He said over 30,000 workers in the plastic manufacturing sector may face layoffs if the tax is implemented.
He stated, “Let’s defer the implementation of this tax. The timing is not right, especially when businesses are already suffering from the effects of the exchange rate. We have been burdened with numerous taxes, and imposing another one now shows a disregard for the growth of businesses. Many companies are relocating from Ghana due to the high cost of doing business, and we are losing our competitiveness. Most imports now avoid the Tema port, opting for Eastern and Western corridors instead. What will be achieved by raising taxes and driving prices up?”
In early March 2024, Botwe said members of the plastic manufacturers started receiving calls from Ghana Revenue Authority (GRA) officers requesting them to start paying a five per cent excise tax on all locally manufactured plastic products.
The Ghana Plastic Manufacturers Association (GPMA) has voiced strong opposition to the government’s new 5% Excise Tax on all locally manufactured plastic products, calling for its immediate suspension and for a broader stakeholder consultation. The Association highlighted the concurrent burden of an existing 10% Environmental Excise Tax on selected plastic materials at entry ports, emphasizing that the new tax would be “obnoxious and retrogressive” for the manufacturing sector.
The GPMA also underscored the significant contributions of the plastic industry to Ghana’s economy, including direct employment to over 39,260 people, generating millions of jobs in plastic waste recycling and the sachet and bottled water industry. The Association reiterated its position, calling for the suspension of the 5% Excise Tax, comprehensive stakeholder consultation, and a clear definition of locally manufactured plastic products to avoid ambiguity.
The Association warned that this tax would significantly impact various industries reliant on plastic products, including food and beverage, retail, water, and pharmaceuticals, ultimately leading to higher consumer prices. The GPMA has called on the GRA to halt these actions until the tax’s ambiguities are clarified.
