Posted: Friday 25th April 2014 at 20:32 pm

AFAG Fight Gov’t – Over Bank VAT


Dr Nana Ayew Afriyie
Government’s decision to introduce a new 17.5 per cent Value Added Tax (VAT) on some banking services is facing stiff opposition with calls for it to be withdrawn.

Latest to join the protesters of the tax is the Alliance for Accountable Governance (AFAG) which is threatening to hit the streets and pavements of Accra with a massive demonstration, should government proceed with its intention.

The tax, set to be implemented in the month of June 2014, has caused serious public apprehension.

Deputy Minister of Finance, Cassiel Ato Baah Forson who sought to reduce public anxiety, issued a statement on Wednesday saying, ‘salaries, savings, deposits, loans and payment with cheques are all exempted from VAT’ and that ‘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.’

But in a statement issued in Accra yesterday, the pressure group indicated it was opposed to the proposed 17.5% VAT on bank services because the current economic situation was precarious.

Basis
This, they said was because ‘under the current turbulent economic mess, led by a failed President, John Mahama, it is unthinkable to further burden Ghanaians with another aggressive and senseless tax regime.’

Apart from that, the statement said, ‘This bank service tax has a transmission effect, and thus, will affect all sections of the economy including the banking sector, businesses and even parents paying their wards’ school fees through bankers’ draft.’

Not only is the group pushing against the implementation of the tax, but also calling for a review of the Act that brought that into being.

Mass Action
AFAG has therefore urged civil society groups, the business community, parents and the nation as a whole, to rise up and oppose the implementation of what they described as ‘this insensitive tax’ with a promise to use all legitimate means to resist the implementation of the tax.

They have consequently given government ‘a one week ultimatum to withdraw this cancerous and vicious tax, failure, we will hit the streets to show to government, Ghanaians discontent with the NDC government’s economic management.’

When the one-week ultimatum elapses, Chairman of AFAG, Dr Nana Ayew Afriyie told Daily Guide, ‘we will certainly come out to give a date for the mass action to let government know the decision is unpopular and Ghanaians are not happy at all.’

Gov’t Defence
But Deputy Information Minister, Felix Kwakye Ofosu, insists ‘it is a necessary evil.’

‘Whiles government recognizes that the new tax measures introduced to broaden our revenue base have the potential to create some difficulties for Ghanaians, it is a necessary step towards mobilizing the necessary revenue to finance our development’, he told DAILY GUIDE.

For him, any such agitations by AFAG or any pressure group would be nothing new since ‘our recent history shows that political agitations and protests to the introduction of every new tax measure is not unusual.’

He recalled the introduction to the VAT by the then Jerry-Rawlings regime which led to a massive demonstration which claimed some human lives.

Rationalization
That notwithstanding, the Deputy Minister noted, ‘We all know the benefits we have gained from VAT as a tax; it has become the mainstay of our health and education systems through the NHIS and then the GETFUND.’

Much as he appreciates the fact that the introduction of the 17.5 per cent bank tax would add up to the woes of Ghanaians, he said ‘you’ll recall that during the introduction of the Communications Service tax, similar arguments were made but these tax measures have gone a long way to support our economy and therefore whiles immediately one may argue that it could impose some difficulties on Ghanaians.’

He was of the conviction that ‘between now and June when the policy will come into effect, enough public education will be done to make people understand and appreciate the basis upon which this measure has been introduced’ and that ‘by the time this public education is concluded, the public will fully understand what is involved.’

By Charles Takyi-Boadu

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