IMANI Chief, Franklin Cudjoe, has accused banks in Ghana of laziness after a wave of public anger over a controversial tax law that targets what the Finance Ministry has called “non-core” financial services in the banking sector.
“I …liken banks in this country to lactogen banks [babies],” Mr. Cudjoe said. “They sit; they hardly do things that are expected of them as real banks. And what they do, essentially, [is to] wait. It is only when it appears the public is in uproar against something the public notices may affect them that … the banks then turn to speak.”
He went on, “[The banks] should have raised flags long ago… They sat down, did nothing and all of a sudden, now that the [implementation] time is near, they are making it look as if government is short-changing us because they [the banks] will pass on [the additional cost onto customers]”.
His comments on Saturday were the first such open reprimand of banks in Ghana, ever since public outrage over the new Value Added Tax law begun.
Some provisions of the law, passed last December, have reportedly triggered panic withdrawal of deposits at the various banks after news reports claimed that a new 17.5 percent VAT levies on “non-core” financial services of banks could erode salaries, savings and deposits of customers.
Reports say the panic withdrawals escalated last week after a number of banks circulated bulk textmessages to alert clients that the new VAT policy will take effect from May, and will affect service charges.
In a desperate bid to restore calm, the Ministry of Finance issued a statement on Tuesday, April 22, 2014 in which it said: “We wish to state categorically that salaries, savings, deposits, loans and payment with cheques are all exempted from VAT.”
It said, “The new VAT Act, Act 870 only affects fees that are charged on non-core financial services such as data processing, legal, accounting, actuarial, notary and consulting services”.
The statement also said, “Act 870 requires the Banks to register for VAT and they can offset the VAT against the VAT they charge. Therefore, the impact of the VAT is not the full 17.5 per cent as being speculated. VAT registered businesses/persons can also offset the VAT (input VAT) they pay to the banks against their VAT (output VAT).
“The general public is also informed that this enforcement of the tax obligation should have started from January 2nd 2014, but the banks were allowed till May to enable them to fully prepare to implement the new policy”.
Although the statement sought to clarify the hazy issues surrounding planned implementation of the new VAT policy, it appears to have done very little to convince critics.