We Will Scrap 17.5% Bank VAT

Government has announced plans to remove the financial sector Value Added Tax of 17.5 percent.

Yaw Osafo-Maafo, Senior Minister-designate, who appeared before the Appointments Committee of Parliament, said the New Patriotic Party (NPP) administration, led by President Nana Addo Dankwa Akufo Addo, was not against the collection of taxes.

“Government is not saying that it will not collect taxes. There are some taxes I describe as nuisance taxes, because the efforts of even doing the collection is not worth it. You create hindrances in production. And one such tax is the financial sector VAT of 17.5 percent. You are taxing banks on their profits as you tax all companies.

“Now the financial sector transactions Act deals with minor operations within the bank, i.e. what would have been cost of transactions (COT) and related issues. “We want to test those, even to come out with the figures. Actual operation itself is a problem to the bank. And that's why you want to tax the 17.5 percent. To me it is an unnecessary tax. And you should do away with it. It means a nuisance tax.”

Corporate tax
Commenting on corporate tax, Mr Osafo-Maafo called for the establishment of a bigger net (or pool of people) to collect taxes rather than collecting taxes from the same few people all the time.

“This is what Ghana has been doing for sometime.”

Withholding tax
“We said in our manifesto that we are going to come from 25 percent to 20 percent. Withholding tax has to be withdrawn.

“What is withholding tax? It is a lazy way of taxing. Somebody is taxed in advance of an operation and is allowed to take it at the end. What does it do? You are taking people's working capital. And it's 5 or 10 percent. Such taxes should be looked at. We are looking at production. “We are looking at this whole thing friendly to businesses. So any tax that creates a hindrance to business, we are going to look at.”

According to him, government's first budget, which will be presented in early March, this year, will review all the afore-stated taxes, adding “we will announce to the country through the budget which taxes we will do away with.”

“We did mention them in our manifesto and we are going to keep to the promise. We have already met on these 3 times, that is the economic sectors, and we are looking at the relevant figures to inform our budget.”

Development plan
Touching on Ghana's 40-year development plan put in place by the former administration, he said: “For anybody to think about a 40-year development plan, when you have governments coming in centre right and centre left and that kind of thing is not practical, because the people who man this plan matter in their ideology and in their thinking. And therefore there's no point doing a plan which would be altered drastically by people who come in. So do it within a period that is likely to be sustained, that is why I think of 5 or 10 years. And I am yet to look at these advanced countries.

“Mr President I had some attachment with the German Ministry of Finance. And when you talk about planning in Germany, nobody goes beyond 10 years. But it's a rolling plan. So you do this and you revise it becomes attainable, it becomes workable.

“In the whole world technology is such that some of the things costing us 20 today will cost us one tomorrow because of technology. So trying to think ahead 40 years, to me it's problematic because of even the whole architecture of the world thinking and technology.”

By Samuel Boadi
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