‘Big banks must pay more taxes’

By Godwill Arthur-Mensah/ Desmond Opoku
Nyarko, GNA  

Accra, Sept. 25, GNA – Professor Sajid Mukhtar
Chaudhry, a Senior Lecturer in Finance at the University of Birmingham, United
Kingdom, has suggested that the Bank of Ghana considers charging five per cent
direct tax on banks’ profits after tax.

This, he said, was in consideration of the
huge profits the banks accrue on depositors’ funds.

“Big banks are making a lot of profits,
charging too much on borrowers, and they’re not paying enough to the
depositors’ funds, therefore, the public must be compensated for that, which is
not happening at the moment,” Prof. Chaudhry said.

He cited the profit threshold of top six banks
in the country namely; the GCB, Ecobank, Barclays, Fidelity, Standard Chartered
and Stanbic banks in 2017, which recorded five billion Ghana cedis,
representing 2.8 per cent of the country’s Gross Domestic Product (GDP).

Prof. Chaudhry made the call at a roundtable
discussion organised by the Institute of Economic Affairs, a policy think tank,
in Accra on Tuesday.

The event was on the theme: “The Contribution
of Banks in the Changing Tax Environment,” which brought together Members of
Parliament, representatives of Civil Society Organisations and the media, to
discuss the banking environment and how it could support the country’s
development agenda.

He said the amount represented 67 per cent of
the country’s total taxes received on goods and services, with some of the
banks witnessing 40 per cent returns on equity.

“This clearly shows that the profit the banks
are earning on the depositors’ funds are quite high and they need to pay more
to the Government,” he said.

Prof. Chaudhry urged the BoG to place one per
cent tax on the banks’ total liabilities net of insured deposits and equity.

This, he said, would enable the country to
gain about GHc160 million annually, which would help reduce the budget deficit
and, thus, contribute to the overall national infrastructural development.

The six banks, he said, had 50 per cent of the
banking market share, with each of the banks earning an average of 28 per cent
of return on equity.

“It is possible that if one starts a banking
business, that person can gain his/her investment back within less than
one-and-half years.”

Prof. Chaudhry, who is a co-author of a book,
titled: “Taxing Banks Fairly,” with interest in financing, taxation and
regulation of banks, urged the banks to refrain from short-term borrowing, and
rather pursue long-term lending to contain any shocks that might come as a result
of withdrawal of the depositors’ funds.

Mr Samuel Okudzeto, a Member of the Council of
State, who chaired the function, underscored the need for the nation to have
common grounds on certain national issues, instead of politicising every policy
decision of a ruling government.

He called for a national dialogue on some of
the concerns raised by Prof. Chaudhry, which could help the nation garner
alternative sources of revenue for development.


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