Government yesterday held a major town hall meeting on the Electronic Transactions Levy (e-levy) in the Eastern Regional Capital, Koforidua to explain the issues involved in the new domestic revenue generation policy.
The meeting formed part of a series of engagements aimed at explaining the basics and importance of the levy as well as taking feedback and inputs from relevant stakeholders that would inform the government on the implementation of the tax policy.
Minister for Finance Ken Ofori-Atta, Minister for Communication and Digitalisation Ursula Owusu-Ekuful, Minister for Information Kojo Oppong Nkrumah and Deputy Majority Leader in Parliament Alexander Afenyo-Markin were the speakers at the meeting.
In attendance, were ordinary Ghanaians, public officials including the Eastern Regional Minister, Seth Kwame Acheampong, sector-specific civil society organisations (CSOs) and other relevant industry stakeholders.
Speaking at the event, Finance Minister Ken Ofori-Atta said the E-levy, when passed by Parliament, will offer the country enough revenue to sustain and keep government’s flagship programmes on course.
He explained that the tax measure will provide government with increased revenues to sustainably invest in key sectors of the Ghanaian economy and support government’s innovative programmes in entrepreneurship, youth employment as well as fund infrastructure projects.
“We must find a way to what they call burden sharing. So let’s dig deep in ourselves. Nobody likes taxes but if you look at our debt situation, we need the levy to raise our own money, to build the roads we are all looking for and fund all other key government programmes in entrepreneurship, youth employment, and infrastructure,” Mr Ofori-Atta explained.
Tax to GDP ratio
Ghana lags behind most of its peers within the West African sub-region as far as tax to Gross Domestic Product (GDP) ratio is concerned.
With dwindling revenue streams attributable to the slowdown in business activities occasioned by the coronavirus pandemic, government through the 2022 Budget Statement and Economic Policy introduced the E-levy, the subject of which has become an issue of controversy and sparked a national conversation on payment of taxes.
While Ghana is doing below 15 percent, countries in the sub-region like Cote d’Ivoire and Nigeria are hovering around an average of 18 percent, raising questions on whether the E-levy is the appropriate tax measure to help government shore up its revenue inflows to fund its projects.
Explaining the conundrum, Mr Ofori-Atta noted that the levy when passed will increase Ghana’s Tax to GDP Ratio from 13 percent to 16 percent to help in the growth and development of the country.
Transparency & accountability
Minister for Communications and Digitalisation Mrs Ursula Owusu-Ekuful has given assurance that there will be transparency and accountability in the usage of proceeds from the E-levy.
Government, she pointed out, intends to use the levy to better the lives of Ghanaians by investing into critical sectors of the economy such as youth employment and job creation.
“Government in its wisdom and after broad consultation has introduced a safety net for the poor and vulnerable whereby transactions less than GHS100 are exempted from the E-levy to ensure that they are not severely impacted. What we are bent on doing as government is to put the monies that accrue from the levy into good use and make sure at every point in time, Ghanaians know what we are using the monies for,” he said.
Down memory lane
Mrs Owusu-Ekuful drew similarities with the Communication Service Tax (CST) introduced under former President John Agyekum Kufuor’s administration in 2008.
She noted that when the CST was introduced, it faced similar opposition from the National Democratic Congress (NDC) and other groups as the E-levy.
However, despite the stiff opposition to the CST, several years on, the country has realised that the dangers raised against this tax measure were unfounded as it has become a major source of revenue for government.
Mrs Owusu-Ekuful gave the assurance that based on the country’s experience with the CST and lessons from other African countries, government is confident that the E-Levy will not bring about any negative changes in consumer behaviour as has been speculated by industry players and people opposed to the levy.
On his part, Mr. Afenyo-Markin emphasised that the E-levy provides Ghanaians with an opportunity to contribute to Ghana’s economic and infrastructural development.
He said the levy will put government in a better position to provide the needs of Ghanaians.
The town hall was organised by the Ministry of Information and was live on various television networks in the country as well as the ministry’s social media pages.
The E-Levy
The e-levy is a new tax measure introduced by the Akufo-Addo administration in the 2022 budget statement and economic policy, on basic transactions related to digital payments and electronic platform transactions.
It is envisaged that a charge of 1.75% will apply to electronic transactions that are more than GH¢100.00 on a daily basis.
A bill for the introduction of the levy is expected to be considered by parliament in the first meeting of the second session of parliament in the coming days as House resumed sitting last Tuesday.
Confusion
There was free-for-all fight in Parliament in December last year when it was being considered whether the bill should be taken under a certificate of urgency.
A voting process for the decision to be taken led to tempestuous disagreement, leading to fisticuffs by some dishonourable lawmakers.
The brawl saw dozens of the opposition Members of Parliament (MPs) exchange blows with their colleagues on the majority side while some officials of parliament tried to protect the Speaker’s seat and the mace of parliament from being attacked.
