Africa-Press – Gambia. The Association of Gambian Manufacturers, AGM, issued a statement outlining its position on the newly introduced excise tax on products, the so-called digital stamp.
The new policy requiring every bottled product to be fixed with tax stamp has caused wide spread concern among dealers and manufacturers.
The Gambia Government said the stamp will make the goods traceable and prevent smuggling of goods avoiding tax.
But according to the AGM, its members are not refusing to pay the excise tax.
“Rather, the dispute centers around the additional administrative costs, namely the cost of the stamps required for the collection of these taxes. We understand the government’s need to collect taxes efficiently, however, it is crucial that this process does not place unnecessary burdens on businesses or consumers. We believe that through constructive dialogue and cooperation, a solution can be found that meets the needs of all parties involved,” the AGM said.
It said the costs associated with the application of stamps on products are fundamentally administrative in nature since the stamps serve as a mechanism for the collection and verification of excise taxes, ensuring compliance and traceability of taxed goods.
“However, this requirement imposes an additional layer of financial burden on manufacturers, including logistical costs.
The process of procuring, applying, and managing these stamps involves significant administrative effort because it requires manufacturers to allocate resources—both in terms of personnel and time—to ensure that every product is appropriately stamped. This includes training staff, setting up new procedures, and monitoring compliance, all of which contribute to increased operational costs.”
It added: Implementing a stamping system requires manufacturers to integrate new logistics into their production lines which can involve purchasing specialised equipment to apply stamps, redesigning packaging processes, and potentially slowing down production rates. Each of these adjustments carries its own set of costs, further straining the financial resources of manufacturers,” the AGM argued.
It also argued that the financial implications too are huge.
“The direct cost of the stamps is a considerable expense because when aggregated across large volumes of production, it would represent a significant outlay for manufacturers. This financial burden is compounded by the need to make payments to a foreign country, introducing additional complexities such as currency exchange and international transaction fees,” the manufacturers lamented.
The AGM further said the new tax policy raises efficiency concerns because stamping each product can reduce overall production efficiency. “The additional step in the production process can lead to bottlenecks, requiring manufacturers to slow down their operations to ensure compliance. This decrease in efficiency can translate to lower output and potentially higher prices for consumers,” it said.
The AGM said by mandating the use of these stamps, the Ministry of Finance and the Gambia Revenue Authority aim to enhance tax compliance and ensure accurate tax collection, but the financial and operational impact on manufacturers cannot be overlooked.
“These costs are not merely incidental; they constitute a substantial portion of the administrative overhead that manufacturers must manage. Ultimately, these administrative costs affect the entire supply chain. Manufacturers facing higher operational costs due to these stamps are likely to pass on these expenses to consumers, leading to increased product prices. This chain reaction can diminish consumer purchasing power and potentially slow down economic activity, highlighting the need for a balanced approach that considers both effective tax collection and the economic impact on businesses and consumers alike,” the AGM concluded.
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