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Sunday, December 5, 2021

FLASHBACK: Collapsed banks bailout cash will be recovered

Finance Minister, Ken Ofori-Atta on August 15, 2018, promised to bring to book people who were responsible for the collapse of some local banks in the country.

According to him, the collapse of these banks was due to the selfish desires of some administrative staff as they used depositors’ fund for personal use.

Speaking at a press conference to inaugurate the Tax Dialogue Initiative in Accra, the finance minister said, “I think as a nation we are really soft about enforcement of laws, and hopefully what we are going to do in the banking sector, everybody will begin to realise that those periods are gone, and if I am going to have to spend GH¢5.76 billion to bail out the banking system because I have to protect depositors, the question is not one of a banking failure. I need to be able to tell you that that managing director or that shareholder stole that money, and it has to be very upfront because that’s GH¢5 billion that I’m using as opposed to School Feeding, maternal issues; and the issue of sentiments are out of it.”

“It is not a bank failure. It is individuals who have done something to bring us to this compromising position, and I think it is that same sense of social justice that we should bring to bear in the tax administration system,” he added.

Read the full story originally published on August 15, 2018 by thefinderonline.

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Finance Minister, Ken Ofori-Atta has said government will ensure that persons responsible for the collapse of some local banks in the country are made to face the law.

He believes the collapse of these banks was not a failure on the part of the banks, but rather individuals who stole depositors’ funds for their personal use.

Speaking at press conference to inaugurate the Tax Dialogue Initiative yesterday, Mr Ofori-Atta maintained that those found culpable will be made to answer for their roles.

“I think as a nation we are really soft about enforcement of laws, and hopefully what we are going to do in the banking sector, everybody will begin to realise that those periods are gone, and if I am going to have to spend GH¢5.76 billion to bail out the banking system because I have to protect depositors, the question is not one of a banking failure.

“I need to be able to tell you that that managing director or that shareholder stole that money, and it has to be very upfront because that’s GH¢5 billion that I’m using as opposed to School Feeding, maternal issues; and the issue of sentiments are out of it.

“It is not a bank failure. It is individuals who have done something to bring us to this compromising position, and I think it is that same sense of social justice that we should bring to bear in the tax administration system.”

The assurance follows concerns that the funds, over GH¢8 billion, used in assisting the troubled banks may not be recovered.

Government is said to have issued about GH¢2.2 billion bond to support GCB as a result of the acquisition of the good assets of UT and Capital banks.

The country has also issued over GH¢5.76 billion to support the operations of Consolidated Bank, the financial institution that took the good assets of the five collapsed banks.

The Minister noted that, “If I have to spend about GH¢5.76 billion to bail out the banking system, because I have to protect depositors, the question is not bank failure, but I should be able to tell you that the money was stolen by a director or shareholder, and it has to be proven very upfront.”

Ofori-Atta said the Tax Dialogue Initiative has been necessitated by the never-ending tax administration issues between the Ghana Revenue Authority (GRA) and the taxpaying public.

“The ministry believes that building a cordial relationship between GRA and key taxpayers, consultants and advisors will help enhance tax administration in the country,” Mr Ofori-Atta noted.

Mr Ofori-Atta said since efforts are being made by government to improve the country’s revenue generation, there is likelihood for tax disputes to increase concurrently.

He added that when such disputes remain unresolved, the expected revenues get locked up, and this affects government’s development plans.

“It is, therefore, necessary for Ghana to put in place measures and structures to handle tax issues swiftly and fairly to preserve the integrity and fairness of the tax system. This Tax Dialogue is one of the ways the ministry is taking to resolve tax administration issues,” the Finance Minister affirmed.

Mr Ken Ofori Atta, Minister of Finance, who inaugurated the committee, said he was confident that the implementation of the CTN will bring in higher tax revenues as it will give the actual value of the cargo.

He assured GUTA and other stakeholders that the ministry will have further discussions with them on the CTN to ensure equity and fairness in its implementation.

He, however, urged them to keep an open mind on the cost aspect of the CTN and to work together with them to address the challenge.

Mr Ofori Atta said the formation of the Tax Dialogue Committee, made up of representatives of trade associations, consultants, tax advisors, academicians, the Ghana Revenue Authority and the Ministry of Finance, will provide a platform for key counterparts in tax administration to dialogue periodically to resolve tax administration issues.

He said the tax dialogue, which began this year, had helped to improve the speed of payment of VAT refunds, payment of due refunds through bank transfers instead of cheques, and the development of an institutional database of tax rulings to avoid duplicating and conflicting, among others.

He noted that the Tax Dialogue Committee, and other Alternative Dispute Resolution mechanisms which are being set up, will help to settle disputes that are likely to arise as Ghana makes efforts to improve revenue generation.

The independent Appeals Board, he said, had received cabinet approval and is currently at the Attorney-General’s Department. “The bill is expected to be passed by the end of the year,” he said.

The inauguration had stakeholders from the Association of Ghana Industries (AGI), the Chamber for Bulk Oil Distributors (CBOD), and Importers and Exporters Association of Ghana coming together to deliberate on tax issues that affect their businesses.

The inaugurated Tax Dialogue Committee began work in earnest, as stakeholders deliberated on issues affecting them moments after the inauguration.

What was to be just an inauguration ceremony turned into a mini sitting of the committee as members raised and discussed some pertinent tax issues that needed to be addressed to ensure effective tax compliance.

One important issue that was discussed was the implementation of the Cargo Tracking Note (CTN), which is currently being implemented.

Mr Joseph Obeng, President of the Ghana Union of Traders Association (GUTA) and a member of the committee, during the discussions at the inauguration yesterday, said it was important for government to thoroughly think through the implementation of the CTN, and if it decides to fully implement it, to remove the existing benchmarks and discretions in determining duties to be paid on cargo at the ports.

According to him, government must remove benchmarks and other discretionary means of determining duties if it believes in the viability of the CTN to give the actual value of the goods for tax purposes.

He said government must also ensure that it can sustain bearing the cost of the use of the CTN, which is estimated at about a $100 per container and which is being borne by government during the implementation period.

He said the CTN was being implemented to address the challenge of importers undervaluing their cargo, by getting the exact value of the cargo from suppliers.

“If we say that we’re using CTN as a problem-solver, then we’re saying that the benchmarks and the discretions at the port should be a thing of the past, and we are seeking a memorandum of understanding to that effect before we roll out with the CTN,” he said.

He explained that using the CTN and keeping the benchmark and discretionary regime at the port will be punishing the importer unnecessarily, adding that importers will also not be ready to bear any cost element for the CTN.

Mr Obeng commended the setting up of the Tax Dialogue Committee, saying that continued engagement with the committee will help to solve many issues in tax compliance.

It would be recalled that government, in the 2018 Mid-Year Budget Review, introduced new taxes and amended existing ones. For instance, the Luxury Vehicle Levy and an additional income tax band of 35% were introduced.

Slight amendments were made with the introduction of the 2.5% Education Levy to replace the 2.5% VAT assigned to the GETFund; and both the Education Levy and existing National Health Insurance Levy (NHIL) were decoupled from the Input-Output mechanism used for the VAT computation.

The Tax Dialogue, which the ministry began this year, has resulted in improvement in the speed of payment of VAT refunds and payment of due VAT refunds through bank transfers, instead of cheques.

Other accomplishments of the dialogue include development of tracking arrangement for request for private ruling letters to ensure prompt responses and development of an institutional database for tax rulings to avoid duplications.

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