Financial analyst, Sydney Casely Hayford has described as ‘ridiculous’ government’s decision to implement a 17.5 per cent Value Added Tax (VAT) on some financial services provided by banks.
According to him, the move was business unfriendly and that, it will not only cripple the banking sector but the objective of running a cashless economy.
‘This is very, very business unfriendly; it is not going to help the banking sector to grow and apart from that you are killing the very thing that we are trying to achieve, which is to get into a cashless economy.”
“We are trying to do as much electronic transactions as possible in order for us to drop the fees and charges we are supposed to pay. Now you are telling us that you are going to tax all the fees and commissions that the banks are going to levy on the e-transactions. How does that become a move toward becoming a cashless society,’ he said Monday morning on Joy FM.
The Ghana Revenue Authority on Friday released a list of 32 fee-based services by the banks that would attract tax from July 1, 2014.
The amendment of the VAT law in November 2013 has expanded the scope VAT and raised the rate from 15 percent (including the National Health Insurance Levy) to 17.5 percent.
According to Mr Casely Hayford, although the 17.5 per cent may seem small, its effect on the consumer cannot be understated.
He explained that ‘I pay something close to about GH¢5 every month for using my ATM, getting internet service from Ecobank and now you are actually going to pay VAT of 17.5 per cent on my GH¢5 which works out to about 90 pesewas. So you might say its only 90 pesewas. It isn’t only 90 pesewas. It’s a lot of money coming out of my money.’
Describing the new law as ridiculous, Mr Casely Hayford noted that should government go ahead to implement the new law, ‘people are just going to keep their monies in their homes and insist that they do cash business only. All I can see here is an attempt to take money out of the pocket of every single individual in this country who has any proximity with any financial institution in this country.’
‘And this is not the way to make money. You can’t tax your way out of bankruptcy. You cannot do it,’ he added.
‘For me, what it means is I’m going to call my bank and say no more ATM services, don’t alert me when money goes into my account or goes out of my account. Because it is ridiculous to pay an additional 17.5 per cent on the fees you are charging me already and where is the value you are adding to me.’
Mr Casely Hayford also called on the Bank of Ghana to ‘sit up’ and ensure the stability of the banking sector since that is the purpose for which the Central Bank was established.
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