Documents sighted by Citi News indicate that the government of Ghana will pay 60 percent of the loan facility tabled before Parliament for the procurement of vehicles for Members of Parliament and members of the Council of State.
The Finance Ministry had tabled two different loan agreements in Parliament to that effect.
If approved, each MP and each council of state member will receive about $100,000 for the purchase of a vehicle.
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Regarding the MPs, the government is seeking approval to secure a $28 million loan facility from the National Investment Bank for the initiative.
It is further asking Parliament to ratify an additional $3.5 million loan agreement with the NIB to purchase vehicles for the 31-member council of state.
Portions of the agreement document sighted by Citi News indicate that, while the $28 million facilities has to be paid within a 45-month period, the $3.5 million loan facility is to be paid within 42 months.
Per the document, the MPs and the Council of State members will take care of only 40 percent of the principal sum, while the government will bear 60% of the principal sum and all the interest that will accrue on the loan.
“The repayment of the facility by the beneficiaries shall be made from deduction at source by the Parliamentary Service of Ghana to the NIB. The repayment by the beneficiaries and the Government of Ghana shall be made at the end of every month for the duration of the agreement,” portions of the agreement read.
Ghanaians are livid over the deal, as some claim the amount could be channeled into productive sectors or developmental projects to benefit the citizenry.
The Government of Ghana continues to struggle to meet its revenue targets.
This has been compounded by the COVID-19 pandemic, which caused the government to seek external financial support to supplement its internally generated funds.
Because of this, the Akufo-Addo government recently increased taxes on petroleum products and introduced new ones to shore up revenue to run the country.
Loan or gift??
A private legal practitioner and professor of accounting, Professor Stephen Kwaku Asare, popularly known as Prof. Kwaku Azar believes the deal is a gift disguised as a loan.
“Government gives the beneficiaries $27,500,000 (i.e., $100,000 * 275) and the beneficiaries pay government $11,000,000 ($40,000 * 275) over 45 months. The difference of $16,500,000 plus the interest of $4,561,666 are non-taxable wealth transfer from government to the beneficiaries.”
“You cannot give someone $100,000 plus interests and ask that they give you $40,000 over 4 years and call that a loan. Plainly, you are giving the person a non-taxable gift of $60,000 plus interest structured to disguise its substance. Let us call a loan a loan and a gift,” he posted on his social media page on Thursday, July 8, 2021.