Time to hide your money: John Mahama is desperate

Immediately they imposed taxes on condoms I knew government’s desperation for money had resulted in a sudden loss of common sense. The withdrawal of that tax left me believing the madness had been cured. But the Ghana Revenue Authority’s list of non-core banking services to be charged 17.5 percent Value Added Tax (VAT) shows that the Mahama government is tone deaf. They never learnt from that condom tax fiasco.

Click here to see the full list of financial services that would attract the 17.5% tax.

In what universe is issuing of cheques, loans, letters of credit considered non-core banking services? This list covers almost all the core things banks do for their clients. I have a savings and a current.  Mostly I withdraw money using my ATM cards or a cheque. The bank alerts me via text message and email anytime there is an activity on any of the accounts. The bank charges me monthly for these services.

Now the Bank of Ghana and GRA says the bank should charge me and every Ghanaian with a bank account VAT because they deem all that we do with our banks as non-core banking services. I know English language is constantly evolving but surely the meaning of “non-core” hasn’t changed. We know government is desperate for money. We also know the folks at the Ministry of Finance, the Bank of Ghana and the Ghana Revenue Authority have no new ideas so government shouldn’t offend us by hiding behind this “non-core” banking nonsense.

The problem with this new list is that, people will simply stop using banking services. Basically my grand-aunt will put her money her under bed while the Abossey Okai businessmen will find creative ways to carry money to China. People will leave their accounts dormant. The banks will lose profit but government won’t make anything from this list.

So since the experts from the three state agencies have failed to provide government with innovative ideas, here is a suggestion to save President John Dramani Mahama from another shameful explanation.

We all saw how the President struggled to explain why the Bank of Ghana’s measures failed to halt the decline of the cedi. Government needs to find ways to reach and tax the about 70 percent of this population who are not banked.

Surely this will be easier and will not cripple businesses under a government that claims it is here to support and grow local businesses. I’m no tax expert but any business savvy person will tell you that taxing current accounts of corporate bodies, clearing charges, letters of credit, and loans adds to the cost of doing business.

I can see where this stupid idea came from – government’s wants a bit of the profits the banks make. So how about taxing the banks instead? That way, the banks will themselves find a better way of passing the extra cost on to the consumer. And they would sensibly decide which consumers to actually pass the extra cost to. Let’s get creative by reaching more people for more profits?