Leaders and importers within Ghana’s second-hand clothing sector are urging government to reconsider the proposed increase of the Flat Value Added Tax (VAT) rate from 4% to 20%, warning that the measure could trigger steep price hikes, shrink consumer purchasing power, and stifle trading activity in markets such as Accra’s bustling Kantamanto hub.
In an interview with newsGhana.com.gh, Edward Atobrah Binkley, General Secretary of the Ghana Used Clothing Dealers Association (GUCDA), welcomed aspects of the government’s modified tax system but described the 16-percentage-point jump in the flat VAT rate as excessive and potentially damaging to both dealers and consumers.
“In fact, to start with, the modified taxation that the government came up with is a good one,” Binkley said. “It expands the tax net so that everybody can pay… and brings parity to the market. But for the flat rate from 4% to 20%, we think it’s too much for us.”
He cautioned that the sharp increase would inevitably raise operating costs for traders, who would have no choice but to pass these costs on to buyers. “It’s going to increase cost, and therefore it will be passed on to consumers… It’s going to be a serious price hike,” he warned, noting that consumers would also be forced to increase their income in order to maintain purchasing power.
Despite their concerns, GUCDA is encouraging its members to comply with tax obligations while the Association seeks dialogue with government. Binkley stressed that traders were not opposed to an increase
in principle, only to the scale of the proposed jump.
“For now, we are saying that our members should comply until we meet the government to negotiate for a reduction,” he stated. “We accept that the tax rate should be increased for everyone to pay, but from 4% to 20% is too much. Government should sit with stakeholders so we can renegotiate for a better rate.”
He emphasised that tax compliance—not punitive rates—is what ultimately strengthens revenue mobilisation. “If we get so many people to comply, that helps government to get so much revenue to develop the country,” he added.
Binkley also appealed to consumers to remain calm. “Consumers should not panic or stop buying. We know the President is a listening person, and we are optimistic he will hear our plea.”
On his part, Kwaaning Asante Boateng, a major importer of second-hand clothing, expressed similar concerns. Describing the proposed VAT jump as a move that would “burden the importer with additional cost,” he warned that any increase in operational expenses would translate directly into higher retail prices.
“As at the time of the press engagement, sales have declined,” Boateng said. He urged government to rescind the proposal or reduce the rate to 6% to avoid further hardship. He encouraged fellow dealers to remain patient as consultations continue.
Both traders reiterated their willingness to support tax reforms—provided they are developed through consensus and designed to sustain, rather than strain, Ghana’s vital used-clothing trade.