Seth Terkper, Former Finance Minister of Ghana, in a statement has denied reports that he endorsed the controversial Electronic Transaction Levy (E-levy). He subsequently accused President Nana Addo Dankwa Akufo-Addo of being the first President of the republic of Ghana to tax savings and investment.
According to the Former Finance Minister, in all his public engagements, both on social media and in traditional media, he has never supported the e-levy because to him the E-levy is an inefficient way of generating revenue for the government.
“My attention has been drawn to publications and news reports alleging my endorsement of the e-levy proposal in the 2022 budget statement. I wish to state that my position, including a presentation I made at PFM-Tax Africa event 2 days ago and reported by various national media, has been consistent on the issue.
“In the four decades since the launch of the Economic Recovery Programme or Structural Adjustment Programme (ERP/SAP) in 1983, Ghana has not had a tax instrument that taxes savings and investments. This government is the first trying to do that.”
Mr. Seth Terkper
Mr. Terkper thus, wondered why Nana Addo’s led government will abolish VAT on non-core financial services in 2017 and only to turn around to tax savings.
“The Telcos pay VAT on taxable goods and services but the government abrogated the VAT on non-core financial services in 2017. Why impose another tax or levy on other finance sector savings, not just expenditures?”
Mr. Seth Terkper
Why Tax E-wallet?
Mr. Terkper emphasized that the e-levy will erode the digitization gains made. He added that the e-levy will encourage people to reverse to the old ways of saving money. He thus quizzed, “What difference does it make if Ghanaians kept their savings (which may have attracted taxes already) under their pillows, or in a bank or in a ‘e-wallet’ (purse) on their phones?”
The Ex Finance Minster explained that in the case of the pillow and bank, they do not pay a tax until the money withdrawn is used to set up a business to turn a profit (income tax), or buy consumer goods and services and pay, mainly, VAT, excise and tariff or customs duty. “Why then tax the equivalent savings taken from the phone ‘wallet’ before one uses it to set up a business and make profit or buy goods to attract the VAT etc?”
Mr Terkper moreover described the new proposed tax as the “most nuisance of nuisance taxes”, which is discriminatory against Ghanaians who save using the electronic means.
“…I have used this expression already to describe the e-levy because, by taxing savings in electronic wallets, government is among others discriminating against savers using electronic ‘wallets’, instead of banks and pillows, to save. This offends the principle of fairness in taxation. Compelling customers to pay tax on the “wallet” transfers but the same tax does not apply to those using cheques and other conventional means; and Engaging in double or multiple taxation of savings that may have attracted the conventional taxes already.”
Mr. Seth Terkper
In conclusion, Mr Seth Terkper called on the government to stop distorting “our well established tax regime with numerous levies”. He added that Ghana’s rationale tax regime has always had elaborate provisions to promote, and not deliberately punish savings and investments.
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