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 \u201cnon-core\u201d financial services in the banking sector.<\/p>\n
\u201cI \u2026liken banks in this country to lactogen banks [babies],\u201d Mr. Cudjoe said. \u201cThey 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 \u2026 the banks then turn to speak.\u201d<\/p>\n
He went on, \u201c[The banks] should have raised flags long ago\u2026 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]\u201d.<\/p>\n
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.<\/p>\n
Panic Withdrawals<\/strong><\/p>\n 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 \u201cnon-core\u201d financial services of banks could erode salaries, savings and deposits of customers.<\/p>\n Reports say the panic withdrawals escalated last week after a number of banks circulated bulk text messages to alert clients that the new VAT policy will take effect from May, and will affect service charges.<\/p>\n In a desperate bid to restore calm, the Ministry of Finance issued a statement on Tuesday, April 22, 2014 in which it said: \u201cWe wish to state categorically that salaries, savings, deposits, loans and payment with cheques are all exempted from VAT.\u201d<\/p>\n It said, \u201cThe 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\u201d.<\/p>\n The statement also said, \u201cAct 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).<\/p>\n \u201cThe 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\u201d.<\/p>\n 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.<\/p>\n AFAG Threatens Street Protests<\/strong><\/p>\n Two days after the Ministry\u2019s statement, pressure group, Alliance for Accountable Governance (AFAG), challenged government to withdraw the planned VAT policy or face a new wave of street protests over the law.<\/p>\n \u201cAFAG will use all legitimate means to resist the implementation of this bank service tax. It is certainly not popular,\u201d the group said in a statement. \u201cGhana\u2019s economy is in a failed state. We feel very sorry for President John Mahama for supervising this mess. It is however not surprising to Ghanaians to see President Mahama, his extended family and cronies getting better off, as Ghanaians continue to wallow in abject poverty\u201d.<\/p>\n Also, opposition Member of Parliament, J.B Danqua-Adu, accused the Ministry of deliberately misinterpreting the VAT law in a bid to quell public anger. He insisted that the charges in the law will hit customers of banks across the country, making them worse off.<\/p>\n Banks Are Lack Vision<\/strong><\/p>\n On Saturday, Franklin Cudjoe, founding President of IMANI Ghana, a policy think tank, waded into the controversy and criticized banks in the country for not being \u201cproactive\u201d.<\/p>\n \u201cI think this confusion is needless,\u201d the IMANI Chief said, accusing the nation\u2019s banks of playing a huge part in provoking the \u201cneedless\u201d public panic over the law.<\/p>\n \u201cThe banks have been very passive,\u201d he said. \u201cWe all saw it coming and the banks \u2013\u2013 that are supposed to be custodians of our money, because without our money they are worth nothing \u2013\u2013 sit and post all kinds of profits; sometimes these [profits] are nebulous\u2026\u201d<\/p>\n Mr. Cudjoe added: \u201cThis is an industry that is supposed to be futuristic and be vision-filled. But like most institutions in this country \u2013\u2013 the banks especially \u2013\u2013 are just an extension of some of our public institutions. They sit and wait, relying on low-hanging fruits. That\u2019s how they make their money.<\/p>\n The IMANI boss called himself a \u201cCapitalist\u201d but said banks in Ghana have a rich history of \u201cjust feeding off what they have not done.\u201d<\/p>\n In his view, the various banks failed to make cogent inputs into the law, leading to the confusion that has stalled its implementation.<\/p>\n \u201cI think businesses in this town have got to be very proactive as well; invest in knowledge,\u201d Mr. Cudjoe said, targeting institutions whose officials keep rushing to think thanks like IMANI to \u201chelp us\u201d to fight policies affecting their sectors when \u2013\u2013 from the onset \u2013\u2013 they could have hired experts to help influence public policy. \u201cWe are not hatchet men,\u201d he insisted. \u201cIt is co-regulation. You should be interested in it\u201d.<\/p>\n The IMANI Chief made the comments on Citi FM\u2019s<\/strong> news analysis programme, The Big Issue<\/em><\/strong> on Saturday. Listeners of the station listened to a playback of the program on Sunday.<\/p>\n Banks Exaggerated Impact Of Levy<\/strong><\/p>\n Another member of the panel, Sydney Caseley-Hayford, a financial analyst, added his voice to Mr. Cudjoe\u2019s open reprimand of banks in the country. \u201cI think the banks have deliberately distorted and exaggerated the effect of [the law] in the public medium,\u201d he said. \u201cIt is a very well coordinated public scare \u2026and that has brought government to its knees\u201d.<\/p>\n Taking his turn, a law lecturer at the Montcrest University, Yaw Oppong, identified what he called serious contradictions in the VAT law and called on government to urgently sponsor a bill to clarify the levies relating to financial transactions.<\/p>\n He said, \u201cWe have to go back [to Parliament] and then fashion out this law, in my view, in a way that will make some more sense to us\u201d.<\/p>\n On Thursday, Citi FM\u2019s<\/strong> Vivian Kai Mensah reported that banks around the country have agreed not to charge \u201cVAT on salaries, savings, deposits, investments and interests or loans\u201d. Implementation of the new VAT policy is said to have been deferred until June.<\/p>\n <\/p>\n By Richard Dela Sky\/Citifmonline.com<\/p>\n","protected":false},"excerpt":{"rendered":" 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 \u201cnon-core\u201d financial services in the banking sector. \u201cI \u2026liken banks in this country to lactogen banks [babies],\u201d Mr. Cudjoe said. \u201cThey sit; they hardly do […]<\/p>\n","protected":false},"author":14,"featured_media":8355,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[19],"tags":[43,38,4],"yoast_head":"\n
\nThe agreement, she said, came at an emergency meeting held between the Ministry of Finance, the Ghana Revenue Authority and the Ghana Association of Bankers on the planned implementation of VAT on financial services.<\/p>\n