Black Market To Thrive With Implementation Of New VAT Act 870

John Kumah, an NPP activist, has kicked against the agreement between commercial banks and the Ghana Revenue Authority to introduce tax on their services to Ghanaians. Patrons of various banks in the country would have to pay more for any service their banks render to them from next month. Reports indicate that starting from May; financial institutions will increase the cost of some services by 17.5 percent. The amended VAT law 2013, Act 870, makes it obligatory for all who use banking services to pay a 17.5% VAT on any transaction they carry out with a bank in Ghana. The revised law received Presidential assent on December 30, 2013, and received notification in the gazette on December 31, 2013, thus making all provisions of the law effective from that day. Addressing the issue, the Executive Secretary of the Bankers Association, D.K Mensah offered an explanation to Ghanaians about the tax system. “Assuming you buy an instrument from a bank, you pay it with your cedis but for doing that for you, I charge you a fee, let say 5 cedis on a product; government is saying that I should take another 17.5 percent on the fees to be paid into government chest," he told an Accra-based radio station. Speaking on U TV's flagship programme "Adekye Nsroma", John Kumah, a staunch member of the New Patriotic Party (NPP) and a legal practitioner, expressed disapproval over the new order. According to him, any increment on cost of banks' services would only bring untold hardship on the citizenry and aggravate their plight. He stated should the bank charge tax on their services, the Ghanaian populace would be forced to utilize "black markets" instead of the banks which may affect the generation of revenues for the Government of Ghana. Black markets are deemed an illegal foreign exchange business by government and the nation to be precise. He believed the tax system will collapse the banking sector and as a result strongly called for a review in the initiative by government to levy customers of banks. To him, the charges are not "measures which can bring development into the country. It won’t inure to the benefit of the nation" and so, opined that "the time has come for Ghanaians to tell the government that ‘Enough is enough’.”

Source: Ameyaw Adu Gyamfi/Peacefmonline.com/Ghana